How Market Turmoil Is Playing Out Across the Globe
The biggest U.S. stock sell-off since February is spreading through Asia.
(Bloomberg) -- The biggest U.S. stock sell-off since February is spreading through Asia.
Japan’s Topix index fell the most since March after the S&P 500 Index slumped 3.3 percent for its largest decline since Feb. 8. A sell-off in Hong Kong and Chinese shares deepened. While no one factor triggered the drops, investors are highlighting fresh news of damage to corporate earnings from the trade war, along with intensifying pressure from the global shift away from monetary stimulus.
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From slumping stocks to soaring volatility, a strengthening yen to a bump in Treasuries, here’s how the sell-off is affecting assets across the world:
Volatility in bond and currency markets remains muted, but over in equities it’s really ramping up. Wall Street’s “fear gauge” -- the CBOE VIX index -- surged 44 percent. Now sitting at 23, that’s significantly above this year’s average of 15.1.
The Australian stock measure soared more than 31 percent, taking it back near to February’s high.
It’s also getting more expensive to hedge on future swings for stocks.
One haven trade that’s benefited in the past 24 hours is the Japanese yen. Having weakened through much of last month, October is seeing the opposite take place.
Most of the move in Treasuries occurred in the final hour of the Wednesday session as yields declined. Ten-year yields that were trading at 3 percent one month ago have soared as high as 3.25 percent this week as investors bet the Federal Reserve can keep ramping up rates. They gave back some of that Wednesday to trade at 3.16 percent.
The U.S. equity rout included a record 4.5 percent plunge for the $10 billion iShares Edge MSCI USA Momentum Factor exchange-traded fund, which bets that the market’s winners will keep on winning.
Emerging-market stocks fell to the lowest since April, while a gauge of developing nation currencies weakened against the dollar.
--With assistance from Luke Kawa.
To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Cormac Mullen, Andreea Papuc
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