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| Asia stock markets drop sharply after US falls | Asia stock markets drop sharply after US falls |
| (about 1 hour later) | |
| Major Asian markets suffered sharp losses on Friday, following another day of steep falls on Wall Street. | Major Asian markets suffered sharp losses on Friday, following another day of steep falls on Wall Street. |
| In a volatile week for global investors, Japan's Nikkei 225 index slid 3.2% during early trading, while China's Shanghai Composite tumbled 5%. | |
| Earlier, the Dow Jones Industrial Average fell by more than 1,000 points for the second time this week. | Earlier, the Dow Jones Industrial Average fell by more than 1,000 points for the second time this week. |
| Sell-offs around the world have been pinned partly on concerns over higher interest rates. | Sell-offs around the world have been pinned partly on concerns over higher interest rates. |
| Elsewhere in Asia on Friday, Hong Kong's Hang Seng pulled back 3.8%, while South Korea's Kospi index traded down 1.9% and Australia's S&P/ASX 200 fell 1.2%. | |
| Those losses came as little surprise, with moves in major US markets providing the cue for global investors. | Those losses came as little surprise, with moves in major US markets providing the cue for global investors. |
| On Thursday, Dow Jones ended 4.2% lower at 23,860, the S&P 500 closed down 3.8%, while the Nasdaq sank 3.9%. European exchanges also headed south on Thursday. | On Thursday, Dow Jones ended 4.2% lower at 23,860, the S&P 500 closed down 3.8%, while the Nasdaq sank 3.9%. European exchanges also headed south on Thursday. |
| "The return of volatility after two relatively calm days supports the idea there are further losses to come in the days and weeks ahead," said CMC Markets analyst Michael McCarthy. | |
| Rate rises imminent? | Rate rises imminent? |
| Investors have begun to worry that inflation might rise more quickly than expected, leading policymakers to raise rates, prompting a pull-back from stocks. | Investors have begun to worry that inflation might rise more quickly than expected, leading policymakers to raise rates, prompting a pull-back from stocks. |
| On Thursday, the Bank of England seemed to offer support for that view. | On Thursday, the Bank of England seemed to offer support for that view. |
| The bank left interest rates at 0.5% at its meeting, but said a strengthening economy meant interest rates were likely to rise sooner than the markets were expecting. | The bank left interest rates at 0.5% at its meeting, but said a strengthening economy meant interest rates were likely to rise sooner than the markets were expecting. |
| Also worrying investors was a government budget proposal announced by US lawmakers, which raises spending caps and could fan inflation. | Also worrying investors was a government budget proposal announced by US lawmakers, which raises spending caps and could fan inflation. |
| Bond yields in the US have also risen in recent weeks, typically a signal of higher rates. | Bond yields in the US have also risen in recent weeks, typically a signal of higher rates. |
| Higher interest rates push up borrowing costs for companies and individuals, which can hurt corporate profits and curb economic activity. | Higher interest rates push up borrowing costs for companies and individuals, which can hurt corporate profits and curb economic activity. |
| At the same time, higher interest rates can make investment alternatives to stocks, such as bonds, more attractive. | At the same time, higher interest rates can make investment alternatives to stocks, such as bonds, more attractive. |
| Shifting conditions | Shifting conditions |
| The uptick in volatility comes as investors react to the shifting conditions. | The uptick in volatility comes as investors react to the shifting conditions. |
| Thursday's declines mean the Dow and S&P 500 have now fallen by more than 10% from the record highs set in January, a threshold analysts call a correction. | Thursday's declines mean the Dow and S&P 500 have now fallen by more than 10% from the record highs set in January, a threshold analysts call a correction. |
| Shares in financial, technology and consumer companies led the declines on Thursday, which infected every sector. American Express and Intel were the two biggest losers on the Dow. | Shares in financial, technology and consumer companies led the declines on Thursday, which infected every sector. American Express and Intel were the two biggest losers on the Dow. |
| Analysts, who have said for months that the financial markets were due a correction after a long period of rising prices, urged calm. | Analysts, who have said for months that the financial markets were due a correction after a long period of rising prices, urged calm. |
| "The latest decline takes us back to where we were 17 November," said Greg McBride, chief financial analyst at Bankrate.com, which tracks interest rates. | "The latest decline takes us back to where we were 17 November," said Greg McBride, chief financial analyst at Bankrate.com, which tracks interest rates. |
| "We've just given back some recent gains, not wiped out anyone's life savings." | "We've just given back some recent gains, not wiped out anyone's life savings." |