Oct 12, 2018 (China Knowledge) - Stock markets experienced its biggest slump since February, from the U.S. through Europe and Asia on Wednesday with the fresh fears of uncertainties regarding global trade, and further exacerbated by U.S Fed rate hike that causes bonds selloff. The market remains bleak, with a further fall in indexes yesterday.
The U.S. Federal Reserve announced, last week, short-term interest rates increase for the third time this year, while hinting for a further increase in December. International Monetary Fund’s (IMF) managing director, Christine Lagarde has called U.S. Federal Reserve’s move legitimate and necessary amid growing inflationary pressure in the U.S. This was done in retaliation to President Donald Trump’s comment on the U.S. Federal Reserve’s move as ‘crazy’.
Lagarde has also rejected American complaints that China was engaged in competitive devaluation of the yuan, calling for greater cooperation and for global leaders not to break the system of international co-operation that has served the world well since the end of world war two.
Technology firms are among the ones which have been hit the hardest by the slump in equity market, with NASDAQ composite plunging 4.08% the day before. The Nasdaq composite closes 1.25% lower at 7329.06 on Thursday. The Dow Jones industrial average (DJIA) has dropped by more than 1000 points, the steepest decline since February to 25,052. Shares price of Apple Inc. <AAPL:NASDAQ> has fallen to USD 214.45, closing at 0.88% lower than the day before. In addition, S&P 500 Index has fallen by 2.06% to 2728.37, a figure below its 50-days moving average.
The Asian markets have also fallen sharply, with the Hang Seng index falling by 3.54%. Both stock market in China suffered more than a 5% fall in their indexes. The Shanghai composite index has fallen by 5.22% while the Shenzhen Composite Index has experienced a greater fall of 6.07%.
The stock market in China have recovered slightly over the day with the market performing better after the lunch break of the stock exchanges today. The Hang Seng Index was up 1.52%, and the Shanghai composite index was up 0.35%. The Shenzhen composite index was up 0.30%, while the Taiwan Stock Exchange Weighted Index was up 0.97% before lunch break.
Japanese and Korean stock markets were hit by the slump too yesterday. The Nikkei 225 has dropped by 3.89%, closing at 22,596.47. The Kospi has tumbled by 4.14%, closing at 2136.31, following its downwards trend.
However, Japan didn’t experience an upward trend unlike Korea today. The Nikkei 225 has fallen even further to 22,521.72, by 0.31%, after the opening from lunch break. Kospi index on the other hand, has experienced a 1.66% increase to 2165.36.
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