Losses on Wall Street Rip Through Asian Financial Markets

Trump has frequently criticised the US central bank for gradually raising interest ratesMore

Asian and European technology stocks suffered significant losses in trading on Thursday as a global equities sell-off intensified.

In Asia, Tokyo's Nikkei 225 gave up 3.9 percent to 22,590.86 and the Shanghai Composite index lost 5.2 percent to 2,583.46, a four-year low.

Markets in Hong Kong, South Korea, Australia and Southeast Asia recorded similar declines.

Investors are wary of possible further USA interest rate hikes, which will raise the cost of corporate borrowing and weigh on economic growth.

The U.S. Federal Reserve recently raised short-term interest rates for the third time this year, with one more expected before the year ends.

On Wednesday, U.S. stocks slumped as concerns over rising interest rates and trade tensions caused a sell-off in technology and internet stocks. "I just think it's natural to see bonds rally after a big equity move". The "latest sneeze" from Wall Street "could morph into a global markets pandemic", he added.

USA markets are coming off their steepest losses in eight months.

The shift higher in yields also threatens to suck funds out of emerging markets, putting particular pressure on the Chinese yuan as Beijing fights a protracted trade battle with the US.

European stocks have been penalised by political turmoil and the region's vulnerability to trade risks, while tax cuts, share buybacks and a booming economy have boosted US stocks.

The International Monetary Fund cut its outlook for global growth this week, citing interest rates and trade tensions.

The S&P 500 ended Wednesday with a loss of 3.29 per cent and the Nasdaq Composite 4.08 per cent, while the Dow shed 2.2 per cent. Australia's S&P/ASX 200 slipped 2.4% to 5,906.00.

Among the biggest sectoral fallers were oil stocks .SXEP , down 2.3 percent, as oil fell to two-week lows, while banks .SX7P fell 1.9 percent.

USA stocks slumped on Wednesday as concerns over rising interest rates and trade tensions caused a sell-off in technology and internet stocks.

US crude CLcv1 fell 1.98 percent to $71.72 per barrel and Brent LCOcv1 was last at $81.30, down 2.15 percent on the day.

The Russell 2000 index of smaller-company stocks shed 2.9%, to 1,575.41.

Snapchat's parent company Snap fell 5.9pc to a new all-time low and Amazon, Apple, Alphabet and Facebook all dropped by between 4.6pc and 6.5pc.

Francis Tan, an investment strategist at UOB Private Bank, says "the valuation of US stocks, especially tech stocks, is still pretty high", and investors could be tempted to not buy into them yet.

"The valuation of USA stocks, especially tech stocks, is still pretty high and there could be some profit taking actions now", Tan explained. The dollar fell back to 112.10 yen, a telling retreat from last week's 114.54 peak.

By 0845 GMT, the euro zone STOXX .STOXXE index fell 1.2 percent, while the UK's FTSE 100 .FTSE was down 1.6 percent, extending its slide as the pound finds support in expectations that Britain would reach a Brexit deal with the European Union.

U.S. crude was off 52 cents at US$72.65 in Asia, while Brent crude had yet to trade after falling 2.3 per cent overnight to end at US$83.09 a barrel.

It will take more than a daily stock market correction to stop the Fed from hiking, said George Goncalves, managing director and head of fixed income strategy at Nomura in NY.

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