This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at http://www.bbc.co.uk/news/business-42957834
The article has changed 20 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| European shares tumble in new sell off | European shares tumble in new sell off |
| (35 minutes later) | |
| European markets have followed Asian markets lower on Tuesday as investors continued to dump shares. | European markets have followed Asian markets lower on Tuesday as investors continued to dump shares. |
| London, Frankfurt and Paris all fell sharply at the open with losses of up to 3%, before recovering some ground. In the US overnight the Dow lost 4.6%. | |
| Japan's Nikkei 225 closed down 4.7%. | Japan's Nikkei 225 closed down 4.7%. |
| The sell-off began last week after data in the US showed stronger wage growth, which raised expectations that US interest rates might start to rise more quickly to tackle inflation. | The sell-off began last week after data in the US showed stronger wage growth, which raised expectations that US interest rates might start to rise more quickly to tackle inflation. |
| The falls follow some good years for investors. In 2017 the Dow was up 25%, helped by a resurgent economy and strong corporate profits. | The falls follow some good years for investors. In 2017 the Dow was up 25%, helped by a resurgent economy and strong corporate profits. |
| London's FTSE stood down 126.67, or 1.74%, at 7,207.31 points after the first few hours of trade, while Frankfurt's Dax and Paris's CAC were down 2% and 1.6% respectively. | |
| Will falls turn into rout? Analysis, Kamal Ahmed, economics editor | Will falls turn into rout? Analysis, Kamal Ahmed, economics editor |
| The softness of markets over the last few days is down to one thing. | The softness of markets over the last few days is down to one thing. |
| As monetary policy begins its long journey away from the trillions of pounds of stimulus pumped into the system to keep the economic ship from the rocks, shareholders are beginning to wonder how much of their investments are in companies with strong fundamentals. | As monetary policy begins its long journey away from the trillions of pounds of stimulus pumped into the system to keep the economic ship from the rocks, shareholders are beginning to wonder how much of their investments are in companies with strong fundamentals. |
| And how much is simply holding up an asset bubble - frothy prices led ever higher in an era of ultra low interest rates and cheap money. | And how much is simply holding up an asset bubble - frothy prices led ever higher in an era of ultra low interest rates and cheap money. |
| Fingers are hovering over the "sell" button. | Fingers are hovering over the "sell" button. |
| And once investors start looking at their portfolio and selling out of the froth, automatic algorithmic trading tends to "chase the dip". | And once investors start looking at their portfolio and selling out of the froth, automatic algorithmic trading tends to "chase the dip". |
| Read more from Kamal here | Read more from Kamal here |
| What happened in other Asian markets? | |
| Hong Kong's Hang Seng ended down 1,649.8 points - or 5.12% - at 30,595.42 and South Korea's Kospi index gave up 2.6%. Australia's benchmark S&P/ASX 200 lost 3.2%. | |
| Japan's share index saw steeper falls overnight, with a loss of some 7% at one point. | |
| Unlike elsewhere in the world, where interest rates are beginning to or are expected to start rising, Japan's immediate economic outlook remains stagnant. The authorities there said there was little chance of interest rates being increased. | |
| The Bank of Japan's governor, Haruhiko Kuroda, on Tuesday ruled out the possibility of raising interest rates in the near future. He said it was "inappropriate" to do so with inflation still about half its 2% target. | |
| What happened in the US? | What happened in the US? |
| Traders returned to their desk in the aftermath of Friday's rout to another bout of selling. | |
| That left the Dow Jones Industrial Average index down 1,175 points, or 4.6% at the end of Monday's session to 24,345.75. | |
| The decline was the largest in percentage terms for the Dow since August 2011, when markets dropped in the aftermath of "Black Monday" - the day Standard & Poor's downgraded its credit rating of the US. | The decline was the largest in percentage terms for the Dow since August 2011, when markets dropped in the aftermath of "Black Monday" - the day Standard & Poor's downgraded its credit rating of the US. |
| The drop on the Dow was closely followed by the wider S&P 500 stock index, down 4.1% and the technology-heavy Nasdaq, which lost 3.7%. | The drop on the Dow was closely followed by the wider S&P 500 stock index, down 4.1% and the technology-heavy Nasdaq, which lost 3.7%. |
| The White House moved to reassure investors saying it was focused on "long-term economic fundamentals, which remain exceptionally strong". | The White House moved to reassure investors saying it was focused on "long-term economic fundamentals, which remain exceptionally strong". |
| Will this have long term impact? | Will this have long term impact? |
| Analysts say that in the short term, investors should be prepared for choppier stock markets, but they are broadly united that there is no cause to worry in the short term. | |
| Jane Sydenham, investment director at the stockbrokers Rathbones, told the BBC the falls did not appear to herald a serious change of sentiment: "It is always a bit too early to tell, but I think these recent market falls are in the nature of a correction. | |
| "What we have to remember is stock markets have had a very smooth ride upwards and we've not had a fall of more than 3% for 15 months. There's been a real lack of volatility, which is very unusual." | |
| She added that bear markets tend to happen ahead of a recession and at the moment growth forecasts were being upgraded. | |
| Erin Gibbs, portfolio manager for S&P Global Market Intelligence, said: "This isn't a collapse of the economy. | |
| "This is concern that the economy is actually doing much better than expected and so we need to re-evaluate." | |
| But Joel Prakken, chief US economist for IHS Markit, predicts share price gains will be limited over the next two years. | |
| "The difference between this year and last year is we're going to see more periods of volatility like this as the market reacts to higher inflation," he said. | "The difference between this year and last year is we're going to see more periods of volatility like this as the market reacts to higher inflation," he said. |
| "We're just not used to it because it's been so long since we've had a significant correction." | "We're just not used to it because it's been so long since we've had a significant correction." |
| However, he added that markets would need to deteriorate more significantly for him to start to worry about the broader economy. | However, he added that markets would need to deteriorate more significantly for him to start to worry about the broader economy. |