On February 6, European markets have followed Asian markets lower as investors continued to dump shares.
Frankfurt, London and Paris all fell sharply at the open with losses of up to 3%, before recovering some ground.
In the US overnight the Dow Jones lost 4.6%.
Japan’s Nikkei 225 closed down 4.7%.
The sell-off began last week after data in the United States showed stronger wage growth, which raised expectations that US interest rates might start to rise more quickly to tackle inflation.
Frankfurt’s Dax and Paris’s CAC were down 2.2% and 2% respectively.
London’s FTSE 100 was down 150 points or 2% at 7,184.74 in mid morning trade.
On February 5, the FTSE 100 closed at its lowest level since April 2017.
The falls follow some good years for investors.
Last year, the Dow Jones was up 25% and London’s FTSE 100 rose 7.6%.
Hong Kong’s Hang Seng ended closed 5% lower and South Korea’s Kospi index gave up 2.6%. Australia’s benchmark S&P/ASX 200 lost 3.2%.
Japan’s Nikkei 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.
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 drop on the Dow Jones was closely followed by the wider S&P 500 stock index, down 4.1% and the technology-heavy NASDAQ, which lost 3.7%.
However, the White House reassures investors saying it was focused on “long-term economic fundamentals, which remain exceptionally strong”.
European markets continue to tumble on October 16 amid fears of a global economic slowdown and the impact of the Ebola crisis.
The main stock markets in Germany, the UK and France fell more than 2%, tracking a sell-off in Asia and on Wall Street.
On October 15, London’s FTSE 100 saw its heaviest one-day fall in 16 months.
Borrowing costs for Greece and Italy rose, and investors looking for a safe haven pushed the gold price higher.
Analysts said that a raft of disappointing economic and corporate news had unnerved investors.
Recent poor data from China, Germany and the US have heightened worries that global economic recovery could go into reverse.
European markets continue to tumble on amid fears of a global economic slowdown and the impact of the Ebola crisis
Meanwhile concerns about the spread of Ebola and its impact on emerging markets have added to the worries. Companies linked to travel and tourism have seen their share prices fall in the past couple of weeks, offsetting hopes that the recent fall in the oil price would lower their long-term fuel costs.
The price of US crude has gone below $80 a barrel for the first time since June 2012, pulling down oil-related shares such as BP and Tullow.
Financial shares were among some of the biggest fallers across Europe. Royal Bank of Scotland was down another 3.6% after falling heavily on October 15.
Meanwhile, in France, Societe Generale and BNP Paribas fell 5% and 4% respectively amid worries about their exposure to a slowdown in southern European economies.
Greece’s borrowing costs rose on Thursday on fears about the country’s exit from the bailout it received during the financial crisis.
The yield on Greek 10-year bonds rose 85.2 basis points to 8.72% – its highest since January. Investors are worried that the country could struggle to borrow money once it is weaned off bailout money.
In Spain, Madrid’s benchmark IBEX 35 index fell 4.28% after a bond issue failed to raise as much as the government hoped.
Meanwhile, gold traded at a one-month high, while the price of copper and some other metals fell to multi-month lows amid concern that demand would fall because of an economic slowdown.
Global oil prices dropped and European shares rose in early trading Monday morning after Iran agreed a deal to curb some of its nuclear activities in return for an easing of international sanctions.
Iran holds the world’s fourth-largest oil reserves, but its exports have been hurt by the tough sanctions against it.
Though Iran will not be allowed to increase its oil sales for six months, the deal has eased tensions in the Middle East – a key oil-producing area.
Brent crude fell more than 2% in early Asian trade on Monday.
Global oil prices dropped after Iran agreed the nuclear deal
It dropped by $2.42 to $108.63 per barrel, while US light sweet crude fell 84 cents to $93.64 per barrel.
Fuel-intensive companies, such as airlines and travel firms, received a boost on the stock markets as a result.
International Airlines Group, the owner of British Airways and Iberia, was up 2.87% in lunchtime trading, while Air France KLM rose 3.11%. Travel operator Thomas Cook lifted 3.68%.
World powers suspect Iran’s nuclear programme is secretly aimed at developing a nuclear bomb – a charge Iran has consistently denied.
In an attempt to force Tehran to curb its programme, the US and other leading economies have imposed a series of tough sanctions aimed at Iran’s oil exports – a key driver of its economy.
European and US stock markets have fallen again after the head of Eurogroup suggested that the Cyprus model, which involves a tax on bank deposits, could form a template in any future bailout.
On Monday morning, hopes the deal would solve the crisis lifted shares.
By 15:30 GMT, all major European markets had fallen into negative territory, joined by US stocks.
Cyprus’ President Nicos Anastasiades, later addressed his country in a television broadcast.
The deal was “painful” but the best that could have been struck under the circumstances, he said.
Nicos Anastasiades said that controls limiting restricting the movement of capital would be temporary and he promised to protect the weak, saying that welfare payments would be met.
Earlier, markets in Europe and the US moved downwards when Jeroen Dijsselbloem, the Dutch Finance Minister who as head of the Eurogroup played a key role in the Cyprus negotiations, said the deal represented a new template for resolving future eurozone banking problems.
“If there is a risk in a bank our first question should be <<OK, what are you in the bank going to do about that?>>,” Jeroen Dijsselbloem told Reuters and the Financial Times.
Jeroen Dijsselbloem later added a clarification saying that Cyprus was “a specific case with exceptional challenges”.
The Cyprus deal puts the burden for dealing with problem banks on their shareholders and creditors – in this particular case, customers with large bank balances – rather than the government and taxpayers – and bondholders, who lend through financial markets.
European and US stock markets have fallen again after the head of Eurogroup suggested that the Cyprus model, which involves a tax on bank deposits, could form a template in any future bailout
Jeroen Dijsselbloem said the pattern for bank rescues should see shareholders take the first hit, then bond holders, who lend money through financial markets, and only then should depositors with large bank balances be tapped.
But his remarks raised fears that other European countries with struggling banks may face the same solution as Cyprus, which agreed to force those with cash on deposit above 100,000 euros, many of whom are Russian, to pay a substantial tax.
Cyprus will receive 10 billion euros ($13 billion) in bailout funds, but has agreed to a major restructuring of its banks.
Small savers will be protected but Cyprus’s second largest bank – Laiki Bank – will be wound up and split into “good” and “bad” banks, with its good assets eventually merged into the Bank of Cyprus, the country’s biggest bank.
The two banks will remain closed until Thursday, while all others will reopen on Tuesday after being closed for more than a week, Cyprus’s central bank says.
The Cypriot government suggested that account holders with deposits of more than 100,000 euros should expect to lose about 30% of their balances.
The UK’s FTSE 100 index ended the day down 0.2%, while Germany’s Dax gave up 0.5%, and France’s Cac lost 1.1%. In New York, the Dow Jones was 0.5% lower.
In Madrid, the market slipped 2.5% while the Milan index was down 2.27%.
The euro was also driven lower, falling to a six-week low against the pound. The euro was down 0.6% to 84.74 pence.
The new deal for Cyprus, unlike previous agreements, does not require the approval of the Cypriot parliament.
The uncertainty over the future of Cyprus in the eurozone was sparked a week ago when its parliament rejected an earlier bailout deal, which also included a controversial bank levy.
Despite the Cypriot economy’s relatively small size, many analysts had been concerned that the crisis would spread to the wider eurozone, had Cyprus been forced to give up the single currency.
There were fears that the country’s possible exit from the euro would trigger a loss of confidence across the single currency bloc, and prompt investors to withdraw from other troubled economies, such as Greece.
However, while Cyprus is now likely to remain in the eurozone, the country still faces significant obstacles as it attempts to recover from the crisis.
The EU-IMF deal involves a massive restructuring of the Cypriot banking system, as well as austerity measures and tax increases.
There has also been significant public anger in Cyprus at the intervention of European authorities, and the credibility of the Cypriot government has been questioned.
European markets have opened lower, with the inconclusive election result in Italy raising fears that political deadlock will delay economic reforms.
Italy’s FTSE MIB index fell 4.7%, while London’s FTSE 100 shed 1.5% and share markets in Frankfurt and Paris also fell more than 2% at the start.
The yield on Italian government bonds also rose sharply, implying markets are more wary of lending to Italy.
Earlier, stock markets in Asia had closed lower.
Japan’s main Nikkei 225 stock index lost 2.2%, Hong Kong’s Hang Seng fell 0.8% and Australia’s ASX was down 1%.
Oil prices also dropped, hit by worries that uncertainty in the eurozone could hit demand, with Brent crude falling 87 cents to $113.57 a barrel.
With all domestic votes counted in Italy’s parliamentary election, the centre-left bloc won the lower house by a tiny margin, but did not secure a majority in the Senate.
Fears are that a split parliament will make it harder for one group to push through their plans to revive the economy, and that may stall Italy’s process of cutting its public debt levels.
Banks were the biggest fallers on the stock markets, with shares in major banks across Europe down more than 4%.
The yield on Italian 10-year government bonds rose to 4.77% from 4.48%, and the gap between the yield on Italian and German 10-year bonds widened.
European markets have opened lower, with the inconclusive election result in Italy raising fears that political deadlock will delay economic reforms
Former Prime Minister Silvio Berlusconi, who has conceded the lower house to Pier Luigi Bersani’s centre-left bloc, played down the significance of the spread, and said he was not worried about market reaction to the vote.
But Spanish Foreign Minister Jose Manuel Garcia-Margallo said there was “extreme concern” over possible movements in bond spreads as a reaction to the results.
“This is a jump to nowhere that does not bode well either for Italy or for Europe,” he said.
Giuseppe Fontana, professor of monetary economics at Leeds University Business School, said Italian voters had sent a “chilling message” to the markets and policy makers.
Georg Grodzki, head of credit research at Legal & General Investment Management, said the Italian result would leave markets guessing for a while.
“Uncertainty is not good for confidence. It’s not bad enough for an immediate abrupt sell-off but it could well build over the next few months into some crisis,” he said.
With political instability likely to continue at least in the near term, Angus Campbell from Capital Spreads said: “The uncertainty that this causes is enough to make anyone nervous and we are likely to see an interim administration for a number of months before fresh elections, unless a working coalition can be formed.”
For more than a year Italy was led by technocrat Mario Monti, appointed after Silvio Berlusconi’s resignation in November 2011 amid an acute debt crisis.
He was tasked with reforming the economy, and introduced unpopular economic austerity measures, implementing spending cuts and tax rises.
Mario Monti resigned in December after Mr Berlusconi’s conservative party withdrew its support from his government. Although he ran in the latest election, his bloc won only 10% of the vote, with the majority of voters rejecting austerity.
Ishaq Siddiqi, market strategist at ETX Capital, warned of future turmoil in Italy.
“What is more worrying for investors is that the political deadlock in Italy would suggest that even if we do see a market-friendly scenario materialize with a reform-minded government taking control, the fact that Berlusconi managed to gain such an influence with his anti-austerity campaign means that we are likely to see a rise in civil unrest in Italy.”
Investors are now looking towards a testimony later on Tuesday from US Federal Reserve chairman Ben Bernanke.
Global markets were shaken last week by an indication from the Fed that it might scale back its strong monetary stimulus sooner than expected.
Global stock markets have fallen after some members of the Federal Reserve suggested its stimulus measures may be increasing the “risks of future economic and financial imbalances”.
The comments came in minutes of the Federal Reserve’s last meeting, where the Fed said it had left its monthly $85 billion bond-buying plan in place.
US markets opened lower on Thursday after recording their biggest drop so far this year on Wednesday.
European markets all closed down.
The Fed comments have raised expectations that the US central bank may scale back its bond-buying programme earlier than predicted.
Currently, the Fed is carrying out its plan of buying $85 billion of bonds a month until the US jobs market sees a substantial improvement.
By buying bonds, the Fed keeps interest rates low, which keeps the cost of borrowing for mortgages and other loans low.
However, the minutes of the Fed’s meeting in January showed that some members were concerned that the bond-buying programmes could push up inflation or could “foster market behavior that could undermine financial stability”.
The minutes said that “a number of participants” commented that an ongoing review of the effectiveness of the bond programme “might well lead the committee to taper or end its purchases before it judged that a substantial improvement in the outlook for the labor market had occurred”.
Global stock markets have fallen after some members of the Federal Reserve suggested its stimulus measures may be increasing the risks of future economic and financial imbalances
The bond-buying programme has been cited as a major reason for the rise in share prices in recent weeks, so signs of a premature end have hit stocks.
“US liquidity concerns following the Fed minutes looks like the pin which will burst the recent bubble in equities,” said Mike McCudden, head of derivatives at Interactive Investor.
On Wall Street, the Dow Jones index ended Wednesday down 108.13 points at 13,927.54, and continued to fall on Thursday, shedding a further 61 points by midday in New York.
In Asia, Japan’s Nikkei 225 fell 159.15 points, or 1.4%, to 11,309.13, while in Hong Kong the Hang Seng index closed down 400.74 points, or 1.7%, at 22,906.67.
European markets all fell, with London’s FTSE 100 closing down 1.6% at 6,291.54 and the Cac 40 in Paris falling 2.3% to 3,624.80.
The dollar rose 0.5% against the euro on Thursday, with one euro buying $1.3206.
While the dollar had been boosted by the Fed minutes, the euro was also hit by the latest survey of the eurozone region which suggested the downturn in the region’s businesses had worsened.
The latest eurozone purchasing managers’ index (PMI), compiled by research firm Markit, fell to 47.3 this month, down from 48.6 in January. A reading below 50 indicates contraction.
The figure was the lowest reading for two months and appeared to dash hopes that the eurozone’s economy would show signs of revival.
It also indicated a growing divergence between Germany and France, with output rising in Germany but declining at an increasing pace in France.
European and Asian markets have gained after a short-term deal to stave off the so-called US fiscal cliff was reached.
UK shares jumped 1.5% while other European indexes were also higher.
Failure to agree a deal would have triggered spending cuts and tax increases worth $600 billion.
There had been fears that the measures would have derailed the modest recovery in the world’s biggest economy and perhaps even push it back into recession.
German stocks gained by 1.6%, while France’s Cac 40 rose 1.4% and Italy’s stocks gained 2%.
In the US, the lower chamber of Congress passed a deal backing a compromise that had already passed in the Senate, which raises taxes for the wealthy and delays spending cuts for two months.
The fiscal cliff measures – cutting spending and increasing taxes dramatically – came into effect automatically at midnight on Monday when George W. Bush-era tax cuts expired.
European and Asian markets have gained after a short-term deal to stave off the so-called US fiscal cliff was reached
The 31st of December deadline triggered tax increases of about $536 billion and spending cuts of $109bn from domestic and military programmes – which has now been averted.
Shares worldwide had been hurt in November and December by fears that the US would not be able to reach any kind of agreement and would go off the cliff.
Earlier, Asian shares gained on the news of the deal. The US is also a key market for most of Asia’s export-dependent economies.
The US dollar rose, jumping against the Japanese yen. The Japanese currency was at 87.30 yen against the US dollar at one point, its lowest level since July 2010.
The yen has fallen almost 9% against the US dollar since November 15.
European markets have fallen after the European Central Bank (ECB) president Mario Draghi said the bank would come up with ways to help struggling eurozone countries “over the coming weeks”.
Analysts had been hoping for more details and immediate action.
Help from the ECB would also only be given if the governments themselves made certain commitments, he said.
The Spanish and Italian stock markets fell sharply while both countries’ borrowing costs rose sharply.
Earlier, the ECB kept the main eurozone interest rate at a record low of 0.75%.
There had been hopes that Mario Draghi could announce immediate measures to bring down the cost of borrowing for some of the eurozone’s struggling members.
“What we have expressed is guidance, and strong guidance, about strong measures which will be completed in the coming weeks,” Mario Draghi said.
High borrowing costs have been at the centre of the eurozone crisis, with countries needing bailouts when the yields on their 10-year bonds have been consistently above 7%.
Bond yields are taken as indicators of what interest rate governments would have to pay to borrow money.
European markets have fallen after the ECB president Mario Draghi said the bank would come up with ways to help struggling eurozone countries "over the coming weeks"
Mario Draghi said that the high yields on some eurozone government bonds were unacceptable, adding that, “the euro is irreversible”.
He said the ECB may intervene in the bond markets to support struggling nations.
But having fallen in recent days due to the anticipation of ECB support, Spain’s 10-year bonds rose above 7% after Mario Draghi spoke, having been at 6.6% before he started.
“Once again, we have no commitment to action from the ECB, and no execution of promises previously made,” said Carl Weinberg, chief economist at High Frequency Economics.
“Traders and investors who expected immediate action are, and should be, disappointed. More scolding of governments, but no ECB action, is the bottom line.”
The yield on Italian 10-year bonds rose from 5.7% before Mario Draghi spoke to 6.2% afterwards.
But yields on short-term bonds fell, reflecting Mario Draghi’s plans to buy them instead of longer term debt.
Some analysts were more positive about Mario Draghi’s comments.
“This is a revolutionary policy, as far as the ECB is concerned. It means the ECB plans to go into the markets and buy bonds, of two to three-year durations, in very substantial quantities,” said Nick Parsons at National Australia Bank.
“These are potentially unlimited and should be big enough to have the desired effect. Mr. Draghi is certainly on the right track.”
At his press conference, Mario Draghi said that the ECB’s bond-buying process would resume, but that it would be different to the Securities Markets Programme (SMP), which involved buying large quantities of government bonds from banks and other financial institutions on the open market.
Mario Draghi said that the new scheme would involve buying shorter-term bonds, which should allay some of the fears of the German government, worried about having to guarantee debts of weaker countries for years.
Governments, however, would also first have to apply for help from one of the eurozone’s rescue funds, the European Financial Stability Facility or the European Stability Mechanism, he said.
They would also have to demonstrate they were making necessary changes.
“Policymakers in the euro area need to push ahead with fiscal consolidation, structural reform and European institution-building with great determination,” he said.
Currently, the European bailout fund – the EFSF – and its delayed sister fund – the ESM – would require any country seeking help to sign a memorandum of understanding, or promise to carry out certain measures such as cutting spending or raising taxes.
When asked whether Spain, and Italy would, therefore, have to submit to similar strictures imposed on Portugal, Ireland and Greece before the ECB could act to buy their bonds, Mario Draghi replied: “Yes, that is exactly how you should see it.”
There were also signs of continued division on the ECB governing council.
Asked whether the ECB’s decisions had been unanimous, he replied: “The endorsement to do whatever it takes to preserve the euro as a stable currency has been unanimous.”
“But it is clear, and it is known, that Mr. Weidmann [ECB member and head of the German bank] and the Bundesbank have their reservations… about buying bonds.”
The ECB, which sets the cost of borrowing for the 17 countries which use the euro, cut its key rate from 1% to 0.75% last month, to try to bring down borrowing costs and stimulate economic activity.
Spain’s economy minister Luis de Guindos has dampened speculation that the country is about to seek a bailout of its bank sector.
Luis de Guindos said no decision would be made until audits of the banks were completed, possibly by the end of June.
There have been reports in the past few days that Spain was seeking an immediate bailout from eurozone funds.
Luis de Guindos was speaking in Brussels, where plans have been published that aim to ensure that taxpayers do not have to fund future bailouts of banks.
An IMF audit of Spain’s banks is due next week, with further independent reports completed about two weeks after, Luis de Guindos said.
“I have absolutely not discussed any intervention in Spain’s banks today,” he told reporters on the sidelines of meetings in Brussels.
Asked if Spain was preparing a request for EU aid, Luis de Guindos said: “We are not preparing anything… we have a road map.”
With investors demanding higher returns to lend money to Spain, its finance minister said the credit markets were “effectively shut” to Spain, inflaming worries that the country would be forced to join Greece, Portugal and Ireland and seek outside help.
Spain has to find at least 80 billion Euros ($100 billion) to strengthen its banks’ capital buffers.
A key test will come on Thursday, with Spain due to auction up to 2 billion Euros of bonds.
Spain's economy minister Luis de Guindos has dampened speculation that the country is about to seek a bailout of its bank sector
Spain is keen to avoid having to ask for a European Union bailout as this would come with strict conditions.
It is instead seeking funds which could be injected directly into the banking system.
Reports suggesting EU officials are looking at how this could happen contributed to a rally on European markets late in the afternoon.
UK Prime Minister David Cameron and US President Barack Obama kept up pressure on European leaders, calling for an “immediate plan” to restore confidence, after the two men spoken on the telephone last night.
David Cameron is due to meet German Chancellor Angela Merkel on Thursday to discuss the issues.
The European Central Bank (ECB) appeared unlikely to take any immediate action to provide further financial support, despite president Mario Draghi acknowledging the seriousness of the eurozone’s crisis.
After the ECB left interest rates unchanged at 1% on Wednesday, Mario Draghi suggested that further monetary policy was not the answer.
The ECB has provided 1 trillion Euros for the banking system with two re-financing operations, or LTROs, designed to ease borrowing costs.
Despite signs that borrowing costs are once again rising sharply, Mario Draghi said: “The issue now is whether these LTROs would actually be effective. Some of these problems in the euro area have nothing to do with monetary policy… and I don’t think it would be right for monetary policy to fill other institutions’ lack of action.”
On Wednesday, the European Commission unveiled proposals designed to stop taxpayers’ money being used to bail out failed banks.
The aim is to ensure losses are borne by bank shareholders and creditors and minimize costs for taxpayers.
However, new legislation is unlikely to come into force before 2014 at the earliest, too late to protect taxpayers from any further immediate bank failures.
“The proposal we have today may be only useful for the future but it does not solve the current problems we face,” said Sharon Bowles, chair of the European Parliament’s economic and finance committee.
There would be new requirements for countries to prepare for a bank collapse, collecting money through an annual levy on banks that would be used to provide emergency loans or guarantees.
The European Commission plans involve drawing up a EU-wide framework that would allow:
• Financial regulators to be more “intrusive” in the running of banks as firms’ stability worsens
• Forcing banks to draw up explicit “recovery” and “resolution” plans in the event of their finances deteriorating
• Countries to enforce the sale of all or a part of failed banks, overriding the rights of shareholders or creditors
• Appointment of a “special manager” at a bank to “restore its financial situation”
• Laying the foundations for an “increasingly integrated EU-level oversight of cross-border entities”
The changes form part of commitments agreed by the leaders of the G20 group of major economies in September 2009.
Michel Barnier, the commissioner who unveiled the plans, said: “We must equip public authorities so that they can deal adequately with future bank crises. Otherwise citizens will once again be left to pay the bill, while the rescued banks continue as before knowing that they will be bailed out again.”
If it wins the backing of EU countries and the European Parliament, the law would mark a step in the direction of the banking union supported by European Central Bank president Mario Draghi.
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