Global stocks plunge after Wall Street bloodbath

The stunning rout in U.S. stocks has spread to global markets.European stocks were hit on Tuesday, with benchm...

Posted: Feb 6, 2018 4:22 PM
Updated: Feb 6, 2018 4:23 PM

The stunning rout in U.S. stocks has spread to global markets.

European stocks were hit on Tuesday, with benchmark indexes in Paris, London and Frankfurt dropping 2%.

Japan's Nikkei nosedived 4.7%, while Hong Kong's Hang Seng suffered a loss of 5.1%.

Those sharp falls came after a brutal trading session in U.S. markets on Monday. The Dow closed down 1,175 points, or 4.6%. It was by far the index's biggest ever point decline for a single trading day.

U.S. stocks swung wildly in early trade on Tuesday.

Related: This is why the Dow is plunging

The market turmoil began early last week but has now intensified.

"Traders are getting nervous there is more to come," said Greg McKenna, chief market strategist at currency trading platform AxiTrader.

Selling on global stock markets has ramped up because of expectations the U.S. Federal Reserve could increase interest rates more quickly than previously thought. Higher interest rates can weigh on companies' earnings and wreak havoc in bond markets.

The growing concerns about the pace of interest rate hikes came after U.S. jobs data on Friday showed wages were growing at their fastest pace since 2009. That's led to fears that inflation -- which has been unusually low in recent years -- could be about to make a big comeback.

Paul Donovan, global chief economist at UBS Wealth Management, said that investors should take a longer view.

"The significance of equity market losses is best viewed against the calm of past months. This is a rather abrupt reminder of what volatility looks like," he said. "Nothing has changed in economic terms."

Related: Market fear is back in a big way

The worries arrived at a time when the Dow and many other major stock indexes were trading near record highs. That had led some experts to warn that markets were overdue for a correction.

The sell-off in Japanese stocks was exacerbated Tuesday as investors flocked to the yen, which is often viewed as a safe haven during periods of market panic, said Jingyi Pan, a strategist at stockbroker IG Group.

A stronger yen is bad news for profits at big Japanese exporters.

The Nikkei has been one of Asia's strongest performing indexes lately, but its plunge this week has now erased all of its gains for the year so far.

-- Charles Riley and Daniel Shane contributed to this report.

Indiana Coronavirus Cases

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Reported Deaths: 9593
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Allen32498545
Hamilton29039315
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Tippecanoe17799130
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Ohio Coronavirus Cases

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Cases: 849704

Reported Deaths: 10518
CountyCasesDeaths
Franklin100046706
Cuyahoga845231068
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Montgomery42660405
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Butler30546229
Stark25443429
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Fairfield1262180
Greene11915136
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Allen9774126
Portage9163107
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Pickaway719550
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Ross543487
Scioto533664
Geauga501155
Darke465591
Ashtabula449373
Lawrence447053
Union444928
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Mercer432088
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Jefferson415469
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Athens37379
Putnam372674
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Ashland342538
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Holmes222864
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Adams172015
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Meigs106823
Monroe100331
Harrison87821
Morgan82229
Vinton68913
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