Market Update: U.S. Stock Selloff Deepens Following Global Rout; Cryptocurrencies Shed $16 Billion in Value

U.S. stocks resumed their massive slide on Thursday, as a cocktail of rising interest rates, trade-related risks and plunging global markets weighed on investor sentiment. After weeks of stability, cryptocurrency prices sold off suddenly and sharply with all major assets reporting big losses.

Stock Rout Intensifies

All of Wall Street’s major indexes settled sharply lower, with the S&P 500 Index closing at its lowest level in over three months. The benchmark gauge fell 2.1% to 2,728.37, with all 11 primary sectors recording losses. Financials, energy, health care, industrials, consumer staples and real estate were all down more than 2%.

The blue-chip Dow Jones Industrial Average plunged 545.91 points, or 2.1%, to 25,052.83. It briefly fell below 25,000 for the first time since July.

Meanwhile, the technology-driven Nasdaq Composite Index reversed gains to close down 1.3% at 7,329.06.

A measure of implied volatility known as the CBOE VIX resumed its large upswing on Thursday, climbing 12.3% to 25.78, the highest since February. The fear gauge trades on a scale of 1-100, where 20 represents the long-term average.

Global Markets Plunge

The vicious cycle of declines hit global markets on Thursday, as Asian and European stocks sold off sharply. Chinese markets sold off the most since 2016, with more than 1,000 companies falling by the daily limit, according to Bloomberg.

https://www.bloomberg.com/news/articles/2018-10-11/hong-kong-stock-market-woes-worsen-with-tech-luxury-selloff

China’s benchmark Shanghai Composite Index closed down 5.2%, its biggest drop since February 2016. The Shanghai Shenzhen CSI 300 Index crashed 4.8%.

Japanese markets also suffered large declines, with the Nikkei 225 index closing down 915.18 points, or 3.9%.

In Europe, all major benchmarks in London, Frankfurt, Paris and Madrid finished down at least 1.5%. Euro Stoxx 50 Pr, the Eurozone benchmark, fell 1.8%.

While the bloodletting in global markets was triggered by the recent selloff on Wall Street, China is picking up where it left off at the beginning of the week. Investors are very pessimistic about the Chinese market, which is mired in a deepening economic slowdown and relentless tariff war with the United States.  China was the center of the 2015 financial meltdown after the central bank devalued its yuan currency unexpectedly.

Cryptos Plunge

Digital assets, which have held up fairly well over the past three weeks, declined suddenly and sharply on Thursday. The combined market capitalization of all coins touched a low of $200 billion, as bitcoin fell more than 5% and leading altcoins put up double-digit losses.

At the time of writing, the total market was worth just below $202 billion, according to CoinMarketCap.

While there was no immediate catalyst for the sudden reversal, controversy surrounding Bitfinex may have contributed to the decline. On Thursday, the exchange announced it had temporarily suspended fiat deposits, though didn’t provide an explanation for its decision. Fiat deposits are expected to go back online within a week.

Bitfinex has been at the center of growing controversy over Tether, a dollar-backed stablecoin, and its underlying financial status. The company released a blog post last weekend dispelling rumors that was insolvent.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi