Stocks toppled again on Wednesday, as jitters about a U.S.-China trade war and regulatory-crackdown on firms such as Facebook left investors facing their first quarterly fall in equity-markets in two years.
Europe’s main bourses opened more than one per cent in the red as the fifth sell-off in six days gathered momentum and sent risk-averse traders piling back to the safety of bond markets.
German Bunds, seen as Europe’s most secure asset due to Berlin’s triple-A-rated finances, rallied hard to send 10-year yields back under 0.5 per cent for the first time since early January.
The rout in stocks came after the tech woes had given the Nasdaq its worst day since June 2016 [.N] on Tuesday.
Losses were extended after China’s state-run Global Times reported that Beijing will soon announce a list of retaliatory tariffs on United States imports.
Since hitting a record on January 26, world stocks have been battered by worries about rising inflation, the pace of U.S. interest rate hikes and the possibility of a global trade war.
The 47-country MSCI global index is down 9 per cent from its high.
“We are rotating from the old regime of low interest rates and growth stocks like the FANGs (Facebook, Amazon, Netflix and Google) into a new world where that paradigm is rocked and that creates volatility,” said Hans Peterson.
Peterson is SEB Investment Management’s global head of asset allocation.
The pan-European STOXX 600 index was last down 1.1 per cent with the region’s tech sector down 2.6 per cent.
U.S. futures were pointing south again too.
Tuesday’s losses saw the Nasdaq slump almost three per cent and the broader S&P 500 drop 1.7 percent.
As well as the Facebook nosedive, Twitter fell 12 per cent while Google parent Alphabet slid 4.5 per cent.
Asia tumbled 1.5 per cent overnight, with Japan’s Nikkei ending down 1.3 per cent and top Chinese internet stock Tencent down 4.6 per cent.
Another weak U.S. spot had been Nvidia, which fell 7.8 per cent after the chipmaker temporarily suspended self-driving tests across the globe after an Uber autonomous vehicle killed a woman.
“There is a sense that there will be more regulations on Facebook or FANG and that the cost of compliance will increase,” said Nobuhiko Kuramochi, chief strategist at Mizuho Securities.
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