LONDON: Europe’s main stock markets fell further on Friday, but not as steeply as in Asia and a day earlier on Wall Street, as traders continue to bank profits following recent surges for equity prices worldwide.
Around 1000 GMT, London’s benchmark FTSE 100 index was down 0.4 percent compared with the closing level on Thursday.
In the eurozone, Frankfurt’s DAX 30 index and the Paris CAC 40 also shed 0.4 percent in value.
“US futures are up at the moment, which is providing some comfort for European markets. But this has been the typical start to many trading days this week, so there is limited trust in what might happen through to the US close,” Rebecca O’Keeffe, head of investment at Interactive Investor, told AFP.
The current “extreme volatility is providing short-term active traders with huge opportunities, and risks. For long term buy-and-hold investors, sticking with… investments over the coming weeks could be something of an emotional roller-coaster ride”, the expert said.
Catching up with more sharp losses in New York and Europe on Thursday, Asian trading floors were a sea of red Friday, with concerns about tighter interest rates, particularly in the United States.
Tokyo, Hong Kong and Shanghai were among the worst hit as investors piled into haven assets such as gold and the yen.
The sell-off followed another battering for Wall Street, where the Dow on Thursday suffered its second-heaviest daily points fall on record — the worst coming on Monday — after key US Treasury bond yields spiked on the likelihood of a number of rates rises this year.
After a blistering 2017 and January, markets worldwide have gone into a spasm in the past two weeks on fears that stronger growth and rising inflation will lift borrowing costs at a faster pace than expected.
Japan’s Nikkei stock index fell 2.3 percent on Friday and is now at levels not seen since mid-October, while Hong Kong dropped 3.1 percent, wiping out its 2018 gains. Shanghai dived 4.1 percent to lows last touched in mid-2017.
– Rate rises –
A key trigger of the stocks pullback was a strong US jobs report a week ago that also showed rising US wage growth, fuelling speculation the Federal Reserve will lift rates more than the three times already forecast this year.
At the same time, the European Central Bank is on the verge of ending its crisis-era stimulus, while the Bank of England warned Thursday that its main interest rates could rise faster-than-expected in 2018.
“The message from ECB and Fed speakers, not to mention the Bank of England, is that rates will continue to climb because of the strength of the global economy,” said Greg McKenna, market strategist at AxiTrader.
With eurozone and British borrowing rates expected to go up, the euro and pound climbed against the dollar on Friday.
The greenback edged up against the yen, but was still sharply down from Thursday’s levels, as panicked investors sought out safety.