Wall Street’s Misery Spreads to Global Stocks; U.S. Futures Recover Slightly in National Day of Mourning

A dramatic selloff of U.S. stocks on Tuesday has quickly spread to Asian and European markets, with global benchmarks reporting steep selloffs amid a self-imposed deadline by the United States and China to resolve their bitter trade dispute. The Nasdaq and New York Stock Exchange were closed on Wednesday as the nation mourned the death of former President George H.W. Bush.

Global Markets Slump

Markets from Tokyo to London faced brisk selloffs on Wednesday, as investors tracked brutal losses in New York during the previous session. In Asia, large declines were reported for the Heng Seng Index, which fell 1.6% to 26,819.68. Mainland China’s CSI 300 Index fell 0.5% to 3,252.00. Meanwhile, Tokyo’s Nikkei 225 Index closed off 0.5% at 21,919.33.

All of Europe’s major benchmarks settled in negative territory midweek. The Euro Stoxx 50 Pr benchmark for Eurozone stocks fell 1.2% to close at 3,150.27. In individual bourses, London’s FTSE 100 Index fell 1.4% to 6,921.84. Germany’s DAX settled down 1.2% at 11,200.24.

U.S. stock futures traded higher overnight, with the Dow Jones mini contract rising 110 points to 25,156.00. The Dow Jones Industrial Average plunged 800 points in regular trading on Tuesday, with trade-sensitive stocks suffering the biggest declines.

90 Days and Counting

China’s Commerce Ministry on Wednesday formally acknowledged the 90-day timeline to negotiate a new free trade agreement with the United States, clearing up any confusion about future negotiating rounds. The 90-day ceasefire was originally communicated by President Trump following his face-to-face meeting with China’s Xi Jinping over the weekend.

The Commerce Ministry issued an official statement on Wednesday acknowledging a “clear timeline and roadmap” for the negotiations. According to the statement, China seeks to quickly implement “an agreed up on consensus.”

Disgruntled by the lack of progress made on free trade, investors dumped riskier assets on Tuesday, leading to the aforementioned selloff in the Dow, S&P 500 and Nasdaq. Fear and uncertainty sparked a nearly 30% spike in the CBOE VIX, Wall Street’s main volatility gauge.

Cryptos See No Progress

The global cryptocurrency market suffered a fresh setback on Wednesday, as bitcoin returned below $3,800 and major altcoins like XRP and Ethereum failed to stem their downfall. Cryptos lost $6 billion in combined market cap, dragging the total universe back down to $122 billion. Only Binance Coin (BNB) and a few dollar-backed stablecoins were spared from the declines.

As Hacked reported earlier, the bitcoin price has established a new trading range between $3,500 and $4,500, and a lack of momentum for the leading digital currency has kept the broader market at a virtual standstill. At the time of writing, bitcoin was down 4.6% at $3,786, according to CoinMarketCap. XRP, the second-largest cryptoasset by market cap, fell 3.5% to $0.3420. Ethereum was down 6.5% at $103.85.

Given that the downtrend is unlikely to let up anytime soon, some investors are already looking ahead to next year. Recent developments in the cryptocurrency market suggest there are brighter days ahead as institutional adoption and commercial use cases continue to grow. Nasdaq and Intercontinental Exchange are scheduled to launch new bitcoin futures markets next year. The heavily funded and institutionally-backed ErisX cryptocurrency exchange is also scheduled for release in 2019.

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.

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