Dow Jones falls 1.8% amid panic selling in Asia and Europe

Guardian Web |

Shares in New York suffered have suffered fresh heavy falls as panic selling affecting stock markets in Asia and Europe spread to Wall Street.

The Dow Jones industrial average dropped by 400 points when trading began, compounding the effect of an 800-point plunge when the US market was last open on Tuesday. The market was closed on Wednesday for the state funeral of President George HW Bush.

Broader measures of the US market also suffered heavy losses as investors ditched shares in favour of safer assets such as government bonds. The S&P 500 was down by more than 1% – leaving it down on the year.

Investors confidence has been dented in recent days by fears of a sharp slowdown in the US economy and a trade war between Washington and Beijing.

But the trigger for the fresh wave of selling was news of the detention of Meng Wanzhou, chief global finance officer for the Chinese telecoms company Huawei by the Canadian authorities. The US has asked for her extradition, while China has demanded the executive’s release.

Shares rose at the start of the week amid optimism that the US and China were backing away from a tit-for-tat trade war, but the mood quickly darkened.

Stock markets in both China and Japan were down by 2% overnight, and the gloom then spread to Europe where the City’s FTSE 100 index fell by almost 200 points to 6725 points – its lowest level in two years – in afternoon trading.

The near 3% drop in the FTSE was matched by hefty declines on the other main European bourses in Frankfurt, Paris and Milan.

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