Earlier today Japan’s Nikkei fell into ‘correction territory’, meaning it has shed more than 10% from its recent high.
The sharp losses on global stock markets in recent days may be a sign that the ‘Goldilocks’ era is over — replaced by some aggressive and hungry bears.
Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities., explains:
Global stocks crumble in vicious sell-off as #goldilocks trade unravels. Asia stocks are suffering dramatically deep and broad losses. Dispersion is breathtakingly low, though recent outperformers are worst hit. European shares seen falling 4-6%. pic.twitter.com/NFSBx3btUP
Good morning from London.
Financial markets are in turmoil after America’s stocks suffered their biggest one-day slide in six years.
The Dow plunged by over 1,100 points on Monday, its worst points loss ever and the biggest one-day percentage decline since the Eurozone crisis of 2011.
This has sent shockwaves through the markets, as investors fear that the long bull market in shares and bonds may be ending.
Worries over rising inflation and the prospect of American interest rate rises sparked Monday’s sell off. Some traders warning that computer trading strategies has triggered a flash crash (at one stage the Dow was down by a vertiginous 1,500 points).
Already today, Asian markets have posted severe losses. Japan’s Nikkei has shed 4.7%, while Australia’s market shed 3.2%.
Asian markets fell sharply this morning – this is Japan’s Nikkei pic.twitter.com/ZzzJg0IqjC
February 6, 2018
My colleague Claire Phipps has been live-blogging all the action in Asia’s markets here:
European markets open in under an hour, and traders are already expecting heavy losses.
City firm IG are calling Britain’s FTSE 100 down around 3%, with the French, German, Italian and Spanish markets also heading for very sharp falls.
Jingyi Pan of IG warns that the markets are febrile today:
Michael Hewson of CMC Markets says this correction has been a long time coming…
These declines have been a long time coming and in a sense have already started to become self-accelerating. At the end of last year margin debt levels on US stocks were at record highs, helping fuel the rise we’ve seen in the last few months.
The sell-off in the last few days is likely to reverse this trend, and potentially accelerate it further, particularly if investors start to unwind it over concerns that we could fall further, which seems likely if events in Asia this morning are any guide.
We’ll be tracking all the action through the day….