LONDON – World equities were in a jittery mood on Thursday as an emerging markets rout posed a major headache for investors, already on red alert over Washington’s trade war with Beijing, dealers said.
In Europe, Frankfurt, London and Paris all bourses closed weaker, extending heady declines of more than two percent over the previous two sessions.
Wall Street also slipped into negative territory, having earlier tried, unsuccessfully, to build on the previous day’s tiny gains.
“A sense of doom and gloom lingered across financial markets today as contagion fears from the brutal emerging market sell-off rattled investor confidence,” said Lukman Otunuga, a research analyst at FXTM.
Earlier Asian bourses deepened their losses as concerns about contagion from emerging markets (EM) — centred on Argentina, Turkey and South Africa — frayed investor nerves, while sentiment was also dented by the possibility of further US tariffs on China.
Meanwhile, India’s rupee hit a new record low of 72 to the dollar.
The turmoil has revived worries of a repeat from 1997, when a fall in the Thai currency mushroomed into a much broader Asian economic crisis.
“Emerging markets turmoil reflects concern about the impact of trade wars on growth, tightening monetary policy and a turn lower in EM growth,” added Kit Juckes, macro strategist at French bank Societe Generale.
“Turkey, South Africa and Argentina are all minor players in global markets but they are all countries with sizeable current account deficits who are in danger of running into international funding problems.
“And eventually, contagion is bound to occur, taking volatility up in developed markets.”
Separately, talks between Washington and Ottawa on the revised North American Free Trade Agreement are continuing.
Most cryptocurrencies fell Thursday fell for the second session running, with dealers citing Goldman Sachs’ reported decision to hold off on the creation of a crypto trading platform as the reason.
Bitcoin lost about 10 percent on the day.