(Bloomberg) -- Asian stocks plunged for a second day as investors continued to flee riskier assets, though U.S. equity futures attempted a comeback as European trading began.
The Nikkei 225 Stock Average closed off its intraday lows, still weak enough to record a drop of more than 10 percent from a high on Jan. 23. Stocks across the region extended a global slump with virtually all shares on the 1,000-plus member MSCI Asia Pacific Index down. Euro Stoxx 50 futures fell more than 3 percent. The yen was flat after advancing earlier on haven demand. Treasuries declined after they also benefited from a flight to safety earlier.
See our blog on the current sell-off here, and for our broader blog on markets, click here.
“How far it goes down? You tell me,” Steven Wieting, global chief investment strategist at Citigroup Inc (NYSE:C)., told Bloomberg TV. “But this speed of decline you cannot keep doing this day after day after day without finding some sort of bottom rather quickly,” he said -- though anticipating that markets will stay volatile for a while.
Elsewhere, oil slumped for a third day and metals joined the sell-off after gaining on Monday. Bitcoin tumbled for a sixth day to trade around $6,000.
For more on the slide in stocks, see:
Traders Aren’t Panicking Despite Massive Late-Session Stock Rout
Bad Day Turns Terrifying as Dow Suffers Worst Point Plunge Ever
VIX at 38 Is Waterloo for Short Vol Trade That Everyone Adored
Goldman Is Warning of More Pain Ahead. Don’t Listen: Gadfly
China’s Willingness to Defend Its Stock Markets Put to Test
Dow’s 15-Minute Plunge Had Elements of a ‘Flash Crash,’ ISI Says
Volatility Jump Has Traders Asking About VIX Note Poison Pill
Many finance professionals were left scratching their heads to explain the severity of the moves in a short space of time. Anxiety was building about the outlook for monetary policy prior to Monday’s rout, with equities being tested by the surge in bond yields. Global shares had just last month risen to record highs on optimism for expanding profits and economic growth.
Even as the Dow suffered its worst point loss ever, some of the biggest investors remained relatively sanguine. Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, said the big declines were “just minor corrections in the scope of things” and there was a lot of cash on the sidelines waiting to buy. Jurrien Timmer, director of global macro at Fidelity Investments, said he doesn’t expect the stock market to drop more than 10 percent.
“I actually think there’s buying opportunities, maybe not today, but through this week as this sell-off exacerbates,” said Sean Fenton, a portfolio manager who oversees about A$1 billion ($788 million) at Tribeca Investment Partners in Sydney.
Here are some key events scheduled for this week:
- The Reserve Bank of Australia left rates unchanged for a record 16th meeting Tuesday.
- Monetary policy decisions are also due in Russia, India, Brazil, Poland, Romania, the U.K., New Zealand, Serbia, Peru and the Philippines.
- Earnings season continues with reports from General Motors (NYSE:GM), Walt Disney, SoftBank, Sanofi (PA:SASY), Philip Morris, Total, Tesla (NASDAQ:TSLA), Rio Tinto (LON:RIO), L’Oreal and Twitter.
- Dallas Fed President Robert Kaplan and New York Fed President William Dudley are among policy officials due to speak in Frankfurt and New York.
These are the main moves in markets:
Stocks
- Euro Stoxx 50 futures fell 3.2 percent in early European trading. Futures on the S&P 500 Index declined 0.1 percent after falling as much as 3 percent. The underlying gauge tumbled 4.1 percent Monday.
- Japan’s Topix index plunged 4.4 percent at the close in Tokyo, its biggest drop since November 2016, and the Nikkei 225 dropped 4.7 percent, paring a slump of as much as 7.1 percent.
- Hong Kong’s Hang Seng Index declined 4.6 percent and the Shanghai Composite Index fell 3.4 percent.
- South Korea’s Kospi index lost 1.5 percent.
- The MSCI Asia Pacific Index plunged 3.4 percent, set for its biggest drop since June 2016, when stocks were hit by the Brexit vote.
Currencies
- The Bloomberg Dollar Spot Index gained less than 0.1 percent.
- The yen was flat at 109.09 per dollar after rising 1 percent on Monday.
- The euro rose 0.2 percent to $1.2397.
- The pound was steady at $1.3966.
Bonds
- The yield on 10-year Treasuries rose about four basis points to 2.74 percent after plunging more than 13 basis points Monday.
- German 10-year bund yields fell about three basis points to 0.71 percent.
Commodities
- West Texas Intermediate crude was down 0.9 percent to $63.56 a barrel.
- Gold rose 0.2 percent to $1,342.79 an ounce.
