'A perfect storm': European stocks plummet as global sell-off wipes $4 trillion from markets

Jason Peters / AP/Press Association Images

• Wall Street's Monday crash spreads to Europe, with major indexes losing more than 3% at the open.
• Germany's DAX, France's CAC 40 and the broad Euro Stoxx 50 index all lost more than 3% of their value before paring their losses to around 2% by mid-morning.
• Concerns about inflation rising more sharply than previously expected are fuelling fears that the Federal Reserve may be forced to tighten monetary policy faster than had been forecast.

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LONDON — The global rout in equity prices hit Europe on Tuesday, with major indices across the continent taking big losses in early trading. It was estimated that the rout has now wiped as much as $4 trillion from the market's value.

Germany's DAX, France's CAC 40 and the broad Euro Stoxx 50 index all fell by more than 3% at the open at 8.00 a.m. GMT (3.00 a.m. ET). Britain's FTSE 100 was down by around 2.8%.

US stocks were pummelled on Monday, with the Dow Jones Industrial Average falling almost 1,200 points, the biggest single day fall in points terms in its history. The USA's two other major indexes, the S&P 500, and the Nasdaq, were down 4.1% and 3.8% respectively.

Those losses then spread to Asia, and have now moved to Europe, where concerns about inflation rising more sharply than previously expected are fuelling fears that the Federal Reserve may be forced to tighten monetary policy faster than had been forecast.

While the open was messy, things calmed a little as the morning progressed, and by 10.00 a.m. GMT (5.00 a.m. ET) losses were hovering around the 2% mark. Here's the scoreboard in Europe:

Investing.com

Speaking about the crash on Tuesday morning, Mike van Dulken, head of research at Accendo Markets said:

"Whilst the roots and drivers are sure to be discussed for days, it looks to emanate from a perfect storm of reasons including, but not restricted to, a strong 2017 rally extending into January, low volatility, low interest rates, over-optimism and complacency, over-leverage and financial engineering, all coming to a head as investors react to the possibility of higher/faster interest rates rises with bond yields creeping higher to jeopardise the current market situation.

European equities had slipped on Monday, although losses were much smaller, with most indexes down around 1%, rather than Tuesday's 3%. 

Market fears reflect the view of Karen Ward, the chief European strategist at JPMorgan Asset Management, who told Business Insider in an interview in January that the biggest challenge to the markets right now is inflation rising quicker than expected.

"Thoughts will turn towards a much less risk-favourable environment quite quickly," should inflation rise faster than expected, Ward told BI.

Den Originalartikel gibt es auf Business Insider UK. Copyright 2018. Und ihr könnt Business Insider UK auf Twitter folgen.

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