Last week was an ugly on stock markets, but not as terrifying it might have been. Still, none of the factors driving the sell-off has changed, and markets in Asia and Europe tumbled again today.
U.S. stock index futures are pointing to a sharply lower opening this morning.
Investors around the world are dumping stocks. Hedge funds in particular are liquidating as the yen carry-trade, borrowing in low-interest yen and in investing in higher-yield markets, is being unwound.
In
Tokyo, stocks fell 6.4 percent to its lowest close since Octobe 1982.
Hong Kong stocks tumbled 12.7 percent; Shanghai ended down 6.3 percent.
Stocks in Europe were down 4 percent or more.
More governments are moving to help shore up banks, including Japan and
Belgium. Finance ministers of the Group of Seven nations expressed concern about the volatility of the yen, and the International Monetary
Fund announced rescue plans for Hungary and Ukraine, days after detailing one for Iceland.
Investors may be focused this week on what governments do and on economic data coming out – the Federal
Reserve is expected to cut its benchmark interest rate on Wednesday and the the first estimate of the U.S. economy’s gross domestic product is released on Thursday. But there is also a pressure to sell in this this market that will not be eased by any good news on the macroeconomic front.
The Financial Times’ Alphaville blog points to a bearish note from Nomura Securities this morning:
“With markets behaving the way they are, rationalising such extreme movements with economic or corporate fundamentals is virtually impossible. Risky financial assets have effectively ceased to be discounters of likely future economic events.”
The U.S. stock index futures are pointing to a decline of 4 percent or more at the opening. Last week, the Standard & Poor’s 500-stock index fell 6.8 percent, the Dow
Jones industrial average declined 5.4 percent, while the Nasdaq composite index lost 9.3 percent.
By Portfolio.com staff
Related Links:
