Markets steady despite massive sell-off in Japan

a a a a
Share this story

LONDON (AP) -- Financial markets steadied Tuesday after the turmoil of the previous day reverberated into the Asian session. However, lingering concerns over the U.S. economy and emerging markets kept the mood among investors jittery.

Traders in Europe held their nerve despite the earlier 4.2 percent dive on Tokyo's Nikkei 225, which sent the leading Japanese stock index to a four-month low. Wall Street futures were also pointing to a modest bounce-back.

David Madden, market analyst at IG, said stocks were "holding up relatively well" considering the massive sell-off in Japan overnight.

"Traders are treading lightly, not wanting to get stung if there is a sudden exodus from equities into cash or bonds," he added.

In Europe, the FTSE 100 index of leading British shares was down 0.4 percent at 6,441 while Germany's DAX fell 1 percent to 9,096. The CAC-40 in France was 0.2 percent lower at 4,098.

Wall Street was poised for small gains at the open after sliding Monday in the wake of a disappointing manufacturing survey from the Institute for Supply Management - Dow futures were 0.2 percent higher while the broader S&P 500 futures rose 0.3 percent.

The turmoil that has afflicted financial markets over the past few weeks has a number of causes. Some analysts think it's a long-overdue correction in stock values that will eventually bottom out. Many indexes had finished 2013 at record highs.

Others think it's likely to last longer, not least because the U.S. Federal Reserve is reducing its monetary stimulus. The stimulus, in its various guises, has helped shore up markets, particularly in developing countries from Brazil to Turkey to India, since the financial crisis.

Meanwhile, investors may be getting increasingly nervous about the fact that U.S. lawmakers have yet to agree on a deal to lift the debt ceiling this month. If they don't, the U.S. faces the prospect of defaulting on some of its debts.

"What we're seeing in the markets so far this year may not be investors panicking about the turmoil in emerging markets, or the ongoing weaknesses in corporate earnings, or even the poor data coming out of the U.S.," said Craig Erlam, market analyst at Alpari.

"Instead, I believe these are all simply being used as an excuse for investors to allow for the significant correction that many investors have been calling for, for a number of months now," he added.

The focus of attention will likely remain on the U.S. this week as a run of economic data culminates on Friday with the nonfarm payrolls report for January. The jobs data often set the market tone for a week or two. Investors will be looking to see if the negative winter-related impact that was evident in the ISM survey has translated into job hiring, too.

There's also Thursday's policy meeting of the European Central Bank. Analysts say the bank will be under pressure to ease policy further as inflation remains stubbornly low despite recent signs of life in the eurozone economy.

Given the importance of upcoming events, many analysts think volatility will likely remain a key feature of the week's trading.

Earlier, Japan led the slide in Asian stocks. The Nikkei tumbled 4.2 percent to 14,008.47 and is down 14 percent over the past month. Elsewhere, South Korea's Kospi shed 1.7 percent to 1,886.85 and Hong Kong's Hang Seng declined 2.9 percent to 21,397.77 on its first day of trading following a 4-day weekend for Lunar New Year. Markets in China and Taiwan were closed.

There was a calmer tone in other financial markets. Among currencies the euro was down 0.1 percent at $1.3515 while the dollar rose 0.1 percent to 101.27 yen. Meanwhile, a barrel of benchmark New York crude was 21 cents a barrel higher at $96.64.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Print this article

Comments

Hmm... It looks like you’re not a WCPO Insider. or Subscribe now to contribute!

More National Business
American, US Airways tweak fees, mileage rules
American, US Airways tweak fees, mileage rules

If you use miles to get a free ticket on American Airlines, you may have to pay to check that suitcase.

How much of your beer money goes to taxes?
How much of your beer money goes to taxes?

The states on each side of the Ohio River are at opposite spectrums when it comes to how much your favorite pint of beer is taxed.

Luxottica shares rise on Google Glass deal
Luxottica shares rise on Google Glass deal

Shares in Italian eyewear maker Luxottica have risen sharply on the announcement that it will make frames for Google's new…

RadioShack closing 1,100 stores as troubles grow
RadioShack closing 1,100 stores as troubles grow

RadioShack plans to close up to 1,100 stores in the U.S. as its troubles continue to grow.

Data-breach costs take toll on Target profit
Data-breach costs take toll on Target profit

Target Corp says the massive data breach over the holidays helped push its profit down 46 percent.

Yellen: Cont'd pullback in Fed stimulus likely
Yellen: Cont'd pullback in Fed stimulus likely

Federal Reserve Chair Janet Yellen says that if the economy keeps improving, the Fed will take "further measured steps" to reduce…

Applications for US jobless benefits fall to 331
Applications for US jobless benefits fall to 331

The number of people applying for U.S. unemployment benefits declined 20,000 last week to 331,000, suggesting that Americans are facing fewer…

CVS Caremark to stop selling tobacco products
CVS Caremark to stop selling tobacco products

CVS Caremark is kicking the habit of selling tobacco products at its more than 7,600 drugstores nationwide.

Satya Nadella tapped as new Microsoft CEO
Satya Nadella tapped as new Microsoft CEO

Microsoft has named Satya Nadella, an executive in charge of the company's small, but growing business of delivering software and…

Markets steady despite massive sell-off in Japan
Markets steady despite massive sell-off in Japan

Financial markets steadied Tuesday after the turmoil of the previous day reverberated into the Asian session. However, lingering concerns…

Market Summary
The Dow Jones Industrial Average SM is proprietary to and is calculated, distributed and marketed by Dow Jones Indexes, a licensed trademark of CME Group Index Services LLC and have been licensed for use. "Dow Jones(r)", "Dow Jones Indexes" and "Dow Jones Industrial Average SM" are service marks of Dow Jones Trademark Holdings, LLC. "CME" is a trademark of Chicago Mercantile Exchange Inc. All content of the Dow Jones Industrial Average (c) CME Group Index Services LLC 2010.