Market Update: U.S. Stocks Take the Plunge as China Selloff Intensifies; Crypto Institutional Lending on the Rise
U.S. stocks swung back sharply into negative territory on Thursday, as a fresh selloff in Chinese markets weighed on investors’ sentiment even as Beijing escaped the “manipulator” label. Cryptocurrenices continued to hover in a narrow range, as risk-off sentiment in traditional markets failed to spur new demand.
Stocks Resume Slide
All of Wall Street’s major indexes finished in the red, with the large-cap S&P 500 Index closing down 1.4% at 2,768.84. Nine of 11 primary sectors contributed to the declines, with information technology, industrials and communication services among the biggest laggards.
Sliding tech shares dragged the Nasdaq Composite Index sharply lower. The benchmark settled down 2.1% at 7,485.14.
The Dow Jones Industrial Average plunged 327.36 points, or 1.3%, to close at 25,379.32.
On Tuesday, the major bourses recorded their biggest single-day advance since March, buoyed by upbeat corporate earnings and easing tensions over Saudi Arabia.
China Roils Markets
Stocks in mainland China were at the center of the selloff on Thursday, as the benchmark Shanghai Composite Index fell to its lowest level in four years. The index closed down 2.9%, extending its October slide to a staggering 12%.
The Shanghai Shenzhen CSI 300 Index fell 2.4%. Hong Kong’s Hang Seng benchmark finished flat.
China’s national currency, the yuan renminbi, touched its lowest level in 21 months after the U.S. Treasury refrained from labelling Beijing a currency “manipulator” in its biannual report. The Trump administration has called out China for manipulating the yuan to maintain a lop-sided trade advantage against the U.S. and other nations. This has prompted calls from within the administration to implement heavy import duties as well as recognize China as a currency manipulator. So far, President Trump has pursued tariffs on more than $250 billion in Chinese imports.
Cryptocurrencies Hold Steady
For a fourth straight session, cryptocurrency prices were locked in a narrow range on Thursday, as a lack of trading catalysts kept market players on the sidelines. This comes despite a sharp rise in futures trading volume in the third quarter, according to CME Group.
The combined value of digital assets in circulation reached a high of $212 billion on Thursday. It would later fall back below $209 billion on subdued trading volumes. Bitcoin, the leading crypto based on market cap and volume, continues to trade comfortably above $6,500. It’s share of the overall market has increased to 54.1%, according to CoinMarketCap.
Institutional adoption of cryptocurrency is steadily rising, according to a new report by Genesis Capital, who in March became the first company to launch an institutional lending business. As CCN reports, the new service has originated more than $550 million in loans over the past seven months, with $130 million still outstanding.
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.