EUROPE MARKETS: European Stocks Head For Worst Week In 2 Years As Global Selloff Rages On

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02/09/2018 | 09:49 am

By Sara Sjolin, MarketWatch

European stock markets opened mostly lower on Friday, tracking a renewed plunge on Wall Street that yanked both the S&P 500 index and Dow average into correction territory on Thursday.

What are markets doing?

The Stoxx Europe 600 index fell 0.4% to 372.68, building on a 1.6% loss from Thursday. The pan-European benchmark is now on track for a 4% weekly loss, which would be its biggest since February 2016.

Germany's DAX 30 index wobbled around the flat line, trading at 12,256.74. The German index is now down 9.7% from its record close of 13,559.60 hit on Jan. 23.

France's CAC 40 index dropped 0.4% to 5,131.78, and the U.K.'s FTSE 100 index gave up 0.5% to 7,136.63.

The euro rose to $1.2280, up from $1.2249 late Thursday in New York.

What is driving the market?

The weakness in Europe came after equities on Wall Street suffered another plunge on Thursday, with the Dow Jones Industrial Average tumbling more than 1,000 points . The U.S. blue-chip S&P 500 index also lost more than 1,000 points in the session for its biggest one-day point drop ever.

That U.S. slump continued into Asian stock markets, which wrapped up their worst week in years Friday. Chinese stocks were hammered, looking at their largest single-day fall since the 2015 rout.

Seen as driving the action were concerns over rising volatility and worries that faster-than-expected inflation could lead to more Federal Reserve interest-rate hikes this year than expected. Analysts have also noted that stocks globally were due for a pullback after scoring big gains in 2017 and in January.

Political factors may also drive sentiment, as investors waited for a key vote to lift the partial U.S. government shutdown, which came in Friday morning after a midnight deadline was missed. The Senate on Friday morning passed a two-year budget deal , but the lapse in government funding will continue until the House passes the bill.

What are analysts saying?

"It would appear that the brief respite for stocks seen in the middle of the week turned out to be the eye of the storm, as once again rising bond yields prompted a further bout of selling across the board, not only in the U.S. last night but in Asia again this morning," said Michael Hewson, chief market analyst at CMC Markets UK, in a note.

"Concerns about rising interest rates weren't helped by an unexpectedly hawkish inflation report from the Bank of England yesterday, while the latest Chinese trade data suggested that the Chinese economy appeared to be ticking along nicely, even if the trade surplus did shrink quite sharply as a result of a big jump in import," he added.

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