Thursday’s sell-off wiped $50 billion from the ASX. Picture: Peter Parks/AFP
Thursday’s sell-off wiped $50 billion from the ASX. Picture: Peter Parks/AFP

Wall Street suffers second plunge

THE Australian share market is poised to extend losses at the open after a volatile overnight session on Wall Street, with sliding oil prices adding to investor jitters over global trade.

The SPI200 futures contract was down 47 points, or 0.81 per cent, to 5,778.0 at 0700 AEDT on Friday, pointing to another decline open for the ASX, and hot on the heels of the worst day for Australian shares since February.

Thursday's trade saw 2.7 per cent wiped off the benchmark ASX 200 to send it to a five-month low.

Overnight, Wall Street indexes tumbled for a second straight session their decline as volatility spiked and investors shunned risky investments, and Nasdaq looked like it could confirm a correction.

The Dow Jones Industrial Average fell 266.04 points, or 1.04 per cent, to 25,332.7, the S&P 500 lost 33.58 points, or 1.21 per cent, to 2,752.1 and the Nasdaq dropped 15.31 points, or 0.21 per cent, to 7,406.74.

The Aussie is buying 71.13 US cents, up from 70.70 US cents at Wednesday's close.

 

WALL STREET SELLOFF DEEPENS

US stocks dipped sharply in a volatile afternoon session on Thursday before paring losses in the final hour of trading amid President Donald Trump's continued attacks on the central bank.

Some market watchers had predicted a bounce on Thursday after Wednesday's pullback, Wall Street's worst day since February.

Wall Street opened with modest gains after modest US inflation data. But it did not take long for volatility to return with a vengeance as major indices hit session lows in the final 90 minutes of the day.

Big losers in the Dow included JPMorgan Chase, Exxon Mobil, McDonald's, Pfizer and Procter & Gamble. All fell at least 2 per cent.

"When we have a recalibration in values, it's not surprising that it takes more than one day," said Art Hogan, chief market strategist at B. Riley FBR. "In these kinds of moves, it usually takes three days to wash out."

Most market viewers saw last week's surge in the yield of the 10-year US Treasury bond as the catalyst for the two-day rout, an unexpectedly fast move higher than raised worries of runaway inflation and draconian Federal Reserve interest rate hikes.

Trump on Thursday doubled down on criticism of the Fed's rate hike policies, saying the US central bank was "making a big mistake" and being "too aggressive," in a talk show appearance on the Fox network.

Some commentators criticised Trump for stepping aggressively into the core decision-making of the Fed, whose independence to political pressure has been seen as crucial to its credibility and the credibility of US markets.

The upcoming third-quarter earnings season has been seen as a potential antidote to the unease. Earnings season begins in earnest on Friday with results from JPMorgan Chase and other large banks.

But Hogan said earnings were also a source of worry because they could showcase the consequences of Trump's trade wars for US companies, from raising costs of products to forcing enterprises to change supply chains.

"The larger concerns we have are about what companies have to say about their concerns about the US and China," Hogan said.

Global stocks in Europe and Asia fell sharply on Thursday, following the down trend in the United States.


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