The sell-off in global stocks that briefly looked to have ended mid-week has come back, with European stocks heading for a five-month low after markets from the U.S. to Asia tipped into declines exceeding 10 percent from their January highs.
The Stoxx Europe 600 Index was set to post its worst week in two years, with all industry sectors in the red Friday. Japanese and South Korean indexes earlier closed down about 2 percent and Hong Kong’s slid about 3 percent.
China, where retail investors dominate, got hit particularly hard, with onshore gauges at one point exceeding 5 percent losses on the day. U.S. futures climbed, even as the U.S. government entered a partial shutdown, and Treasuries yields rose.
Meanwhile, the dollar weakened against the euro and the pound, and strengthened against the yen. China set the yuan lower Friday after it weakened the most since 2015 yesterday.
Equity traders have yet to get comfortable with a jump up in benchmark U.S. 10-year yields to the highest in four years, and worries over unwinding bets against volatility in stocks continue to cast a shadow over markets.
The negative superlatives have piled up quickly: the S&P 500 has erased its gain for the year, closed at a two-month low and is on track for its worst week since 2011. The Dow plunged more than 1,000 points for the second time in four days. The MSCI Asia Pacific Index is set for the worst week since at least February 2016.
Pressure on U.S. stocks again came from the Treasury market, where another weak auction put gave bond bears ammunition, sending the 10-year yield as high as 2.88 percent. Equity investors took the signal to mean interest rates will push higher, denting earnings and consumer-spending power. Over $5 trillion has been wiped from global stock markets since Jan. 26, according to S&P Dow Jones Indices.
“There’s some big-money players that have really leveraged to the low rates forever, and they have to unwind those trades,” said Doug Cote, chief market strategist at Voya Investment Management. “They could be in full panic mode right now.”
Elsewhere, oil headed toward its worst week in almost a year as the global risk-asset rout further rankled investors already concerned over growing U.S. supply. Gold steadied and industrial metals declined.
Here are some events scheduled for the remainder of this week:
The Bank of Russia is set to hold a rates decision Friday, with most economists forecasting a cut.
And these are the main moves in markets:
The Stoxx Europe 600 Index dipped 0.4 percent as of 8:06 a.m. London time, the lowest in more than five months.
The U.K.’s FTSE 100 Index decreased 0.3 percent.
Germany’s DAX Index advanced 0.1 percent.
Futures on the S&P 500 Index gained 0.8 percent.
The MSCI Asia Pacific Index fell 1.9 percent as of 4:17 p.m. Tokyo time.
Topix index fell 1.9 percent.
Hong Kong’s Hang Seng Index tumbled 3.1 percent.
Kospi index fell 1.8 percent.
The Bloomberg Dollar Spot Index declined 0.2 percent.
The euro gained 0.3 percent to $1.2278, the biggest rise in more than a week.
The British pound advanced 0.4 percent to $1.3965.
The Japanese yen dipped 0.4 percent to 109.14 per dollar.
South Africa’s rand jumped 0.7 percent to 12.083 per dollar.
The yield on 10-year Treasuries gained two basis points to 2.85 percent, the highest in about four years.
Germany’s 10-year yield climbed less than one basis point to 0.76 percent.
Britain’s 10-year yield fell less than one basis point to 1.617 percent.
Japan’s 10-year yield sank two basis points to 0.066 percent, the lowest in more than a month on the biggest tumble in 12 weeks.
West Texas Intermediate crude declined 1 percent to $60.53 a barrel, reaching the lowest in more than five weeks on its sixth consecutive decline.
Gold fell 0.2 percent to $1,316.02 an ounce, the lowest in a month.