Global stocks sink for 2nd day after Wall Street slide

Joe McDonald, The Associated Press</span>
Published Friday, December 21, 2018 1:20AM EST
Last Updated Friday, December 21, 2018 3:44AM EST

BEIJING -- Global stocks fell further Friday after Wall Street slid on recession fears, putting markets in London, Frankfurt, Shanghai and Tokyo on track to end 2018 down more than 10 per cent.

In early trading, Germany's DAX lost 0.5 per cent and France's CAC 40 retreated 0.4 per cent. Tokyo's Nikkei 225 index fell 1.6 per cent and the Shanghai Composite Index ended down 0.8 per cent.

The Chinese market is 2018's worst performer, down nearly 25 per cent for the year.

Stocks usually end the year with a flourish. But investors worry global economic growth is cooling and the U.S. could slip into a recession in the next few years.

After "years of outperformance," U.S. markets are working off "overvaluation in some areas" such as major tech companies, said Shane Oliver of AMP Capital in a report.

China and other Asian markets "fell much earlier and harder and so far are holding above their October lows," said Oliver.

London's FTSE 100 gained 0.2 per cent to 6,730.09 points, but is down 10.8 per cent for the year. The DAX declined to 10,561.33 for a year-to-date loss of 19 per cent. The CAC 40 fell to 4,671.13.

The Nikkei declined to 20,166.19, down nearly 13 per cent for the year. Shanghai declined to 2,516.25. Sydney's S&P-ASX 200 retreated 0.7 per cent to 5,467.60 and Hong Kong's Hang Seng gave up 0.3 per cent to 25,546.99.

Seoul's Kospi rose 1 point to 2,061.49 and India's Sensex declined 1.2 per cent to 35,993.27. Taiwan gained while New Zealand and Southeast Asia declined.

Wall Street is headed for its worst December since the Great Depression.

The Dow Jones Industrial Average dropped 464 points on Thursday, bringing its losses to more than 1,700 since last Friday.

The broader Standard & Poor's 500 index is down 16 per cent from its late-September peak. The technology-heavy Nasdaq composite is down 19.5 per cent from its record high in August.

The S&P 500 future was off 0.2 per cent in a sign investors expect a further decline Friday. The Dow's future was little-changed.

The market is swooning even as the U.S. economy is on track to expand at the fastest pace in 13 years. Markets tend to move, however, on what investors anticipate will happen further out.

Other threats: the trade dispute between Washington and Beijing and rising U.S. interest rates, which act as a brake on economic growth by making it more expensive for businesses and individuals to borrow money.

On Thursday, the S&P 500 lost 1.6 per cent while the Dow fell 2 per cent.

The Nasdaq fell 1.6 per cent and the Russell 2000 index of smaller companies dropped 1.7 per cent.

This week's U.S. sell-off came after the Federal Reserve raised interest rates for the fourth time this year and signalled more increases are likely next year. Investors were disappointed Chairman Jerome Powell failed to indicate a bigger slowdown in the pace of rate hikes.

On Thursday, Treasury Secretary Steven Mnuchin told Fox Business the market reaction to the Fed was "completely overblown."

In Asia, investors were disappointed Chinese President Xi Jinping announced no initiatives to boost cooling economic growth in a speech Tuesday.

In energy markets, benchmark U.S. crude rebounded 48 cents to $46.37 per barrel in electronic trading on the New York Mercantile Exchange. That came after the contract plunged $2.29 on Thursday to close at $45.88.

Brent crude, used to price international oils, rose 54 cents to $54.89 per barrel in London. It fell $2.89 the previous session to $54.35.

In currency trading, the dollar edged down to 111.22 yen from Thursday's 111.24 yen. The euro gained to $1.1469 from $1.1447.

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