Stocks Slump as Selloff Deepens; Treasuries Steady: Markets Wrap

• February 05 2018
• Samuel Potter

The global equity rout extended on Tuesday as first Asian and then European markets tumbled, sending a gauge of world stocks toward the biggest three-day slide since 2015. U.S. futures fluctuated before falling, while Treasuries steadied and the dollar edged …

The global equity rout extended on Tuesday as first Asian and then European markets tumbled, sending a gauge of world stocks toward the biggest three-day slide since 2015. U.S. futures fluctuated before falling, while Treasuries steadied and the dollar edged lower.

The Stoxx Europe 600 Index at one point slumped the most since June 2016, with every industry sector falling as much as 2 percent. Japan’s Nikkei entered a correction as most of the shares on the 1,000-plus member MSCI Asia Pacific Index declined. Amid the sea of red, some safe-haven assets, including gold and European bonds, traded higher.

Terminal users can read more in our live blog on the selloff.

Web users can read more here about the global rout

What began with rising bond yields has become a selloff across global equity markets, as investors fret the return of inflation and higher rates that could erode profitability for companies already trading at elevated valuations. Traders will be watching how the moves unfold from here -- a sustained stock slump has the potential to undermine consumer and business sentiment, crimp borrowing and so start to curtail global growth.

“Let’s be clear: in the long span of financial history, this is not news,” said James Bateman, CIO of multi asset at Fidelity International. “In a world where the concept of a ‘correction’ almost feels alien and where equities felt like an unstoppable one-way bet for a while, the normality of a setback can feel more painful.”

As assets decline volatility is surging, causing pain for traders who had positioned for price swings to remain muted. Trading was halted in some exchange-traded products used to bet against volatility.

Elsewhere, oil slumped for a third day and metals joined the selloff after gaining on Monday. Bitcoin tumbled for a sixth day, at one point trading below $6,000 for the first time since October.

Here are some key events scheduled for this week:

• Monetary policy decisions are due in Russia, India, Brazil, Poland, Romania, the U.K., New Zealand, Serbia, Peru and the Philippines.
• Earnings season continues with reports from General Motors, Walt Disney, SoftBank, Sanofi, Philip Morris, Total, Tesla, Rio Tinto, L’Oreal and Twitter.
• Dallas Fed President Robert Kaplan and New York Fed President William Dudley are among policy officials due to speak in Frankfurt and New York.

These are the main moves in markets:

Stocks

• The Stoxx Europe 600 Index decreased 2.1 percent as of 6:41 a.m. New York time, hitting the lowest in five months with its seventh consecutive decline and the largest dip in more than 19 months.
• Futures on the S&P 500 Index fell 0.5 percent to the lowest in almost 11 weeks.
• The MSCI Asia Pacific Index sank 3.4 percent to the lowest in almost six weeks on the largest tumble in more than 19 months.
• The U.K.’s FTSE 100 Index dipped 2.2 percent, reaching the lowest in almost 10 months on its sixth consecutive decline and the biggest decrease in almost 10 months.
• The MSCI Emerging Market Index sank 3 percent to the lowest in five weeks on the largest tumble in more than 19 months.

Currencies

• The Bloomberg Dollar Spot Index fell less than 0.05 percent.
• The euro climbed 0.3 percent to $1.24.
• The British pound dipped 0.1 percent to $1.3949, the weakest in more than two weeks.
• The Japanese yen climbed 0.1 percent to 109.03 per dollar, the strongest in a week.
• South Africa’s rand jumped 0.2 percent to 12.1002 per dollar.
• The MSCI Emerging Markets Currency Index declined 0.1 percent to the lowest in two weeks.

Bonds

• The yield on 10-year Treasuries rose less than one basis point to 2.71 percent.
• Germany’s 10-year yield declined six basis points to 0.68 percent, the lowest in more than a week on the largest drop in more than two months.
• Britain’s 10-year yield declined six basis points to 1.499 percent, the lowest in a week on the biggest fall in almost five weeks.

Commodities

• West Texas Intermediate crude dipped 0.8 percent to $63.66 a barrel, the lowest in more than two weeks.
• Gold rose 0.2 percent to $1,342.70 an ounce.

For more on the slide in stocks, see:
Traders Aren’t Panicking Despite Massive Late-Session Stock Rout
Bad Day Turns Terrifying as Dow Suffers Worst Point Plunge Ever
VIX at 38 Is Waterloo for Short Vol Trade That Everyone Adored
Goldman Is Warning of More Pain Ahead. Don’t Listen: Gadfly
China’s Willingness to Defend Its Stock Markets Put to Test 
Dow’s 15-Minute Plunge Had Elements of a ‘Flash Crash,’ ISI Says
Volatility Jump Has Traders Asking About VIX Note Poison Pill

— With assistance by Matthew Burgess, Sabrina Willmer, Katia Porzecanski, Adam Haigh, and Andreea Papuc