US stocks went into “free fall” yesterday, sparking large scale sell-offs on Asian markets this morning.
The Dow Jones suffered its largest single-day point decline in history, plunging by almost 1,600 points before buyers bought back in to “limit the damage”, says CNN.
At the closing bell, the Dow was still down by 1,175 points, a drop of 4.6% that erased all of the gains made by US markets so far this year. It’s the biggest fall in percentage terms since “Black Monday” in August 2011.
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Other US indices reflected the drop in the Dow, with the S&P 500 index falling by 4.1% and the Nasdaq by 3.7%.
Investors reacting to recent global equity losses, and concerns that a number of central banks look likely to raise interest rates to curb inflationary pressures from surging global economies contributed to the drop.
“Economic news from the US has been stronger than anticipated,” David Kuo, chief executive of financial services advisory Motley Fool, told the BBC. “So, perversely, the market correction has been caused by positive economic news.”
Asian markets followed suit, with Japan’s Nikkei hit particularly hard, losing more than 6.6% of its value. Hong Kong shares also suffered losses of almost 5%t, and Australian shares fell by more than 3%.
