Stocks Drop As Commodities Sink
The Dow is down 1,492.60 points, or 8.4 per cent.
The Stoxx Europe 600 was 1.9% lower midmorning, after opening little-changed and steadily falling.
The drop in Volkswagen affected other auto stocks, with BMW and Daimler down over 1 percent, while Germany’s DAX rose 0.5 percent, underperforming its European peers.
VW IN CRISIS: Volkswagen AG, the world’s top-selling carmaker, issued a profit warning after it said that some 11 million of its diesel vehicles worldwide were fitted with software to cheat USA emissions test. The company said it was setting aside around 6.5 billion euros ($7.3 billion) to cover the fallout from the scandal.
“There are a lot of data points that may be unsettling and we may be in a more volatile environment until we get some clarity”, he said. “The uncertainty hasn’t been removed by the Fed last week”.
Global stock markets were uneven Monday after the Fed’s decision to delay a rate hike added to pessimism about global growth prospects. Their remarks suggested continued improvement in the domestic economy may overshadow concerns about global conditions. Although rock-bottom rates have helped fuel years of rising stocks since the financial crisis, the Fed’s reluctance to lift borrowing costs was seen as a reminder that growth in the US and elsewhere remains vulnerable to a slowdown in China. “This coupled with flimsy market sentiments made for an explosive cocktail of risk selling”, he said. More insight into Fed thinking will come Thursday when Fed chief Janet Yellen delivers a speech. The Chicago Board Options Exchange Volatility Index has closed above 20 for 22 straight sessions, the longest stretch since June 2012.
Several technical charts are also sounding warning signals that the worst of equities turmoil may not be over.
A so-called head-and-shoulders pattern is a formation comprising two peaks separated by a higher peak.
WELLINGTON – The S&P/NZX 50 Index advanced 13.27 points, or 0.2 per cent, to 5696.79.
Analysts cited a report from the Asian Development Bank projecting lower growth in Asia after it cut its forecast for Chinese growth in 2015 to 6.8 percent from the previous projection of 7.2 percent.
The S&P 500 and Nasdaq composite were within 10 percent of their 52-week highs.