Asian Shares Tumble After Wall Street Suffers Its Biggest Decline Since 2011

The Dow Jones industrial average plunged more than 1,100 points on Monday as stocks took their worst loss in six and a half years

The Dow Jones industrial average plunged more than 1,100 points on Monday as stocks took their worst loss in six and a half years

Some analysts also say markets tend to get edgy when the US Federal Reserve has a new leadership.

The Nikkei average opened sharply higher, surging almost 3.5 percent at one point as investors bought on dips following the recent slumps.

The Nasdaq composite fell 3.8 per cent to 6,967.53, while the Russell 2000 index of smaller-company stocks sank 3.6 per cent to 1,491.09.

A 10 per cent drop from a peak is referred to on Wall Street as a "correction".

But now with United States interest rates expected to rise, traders say many Asian investors are feeling anxious that the USA stock market rally may be winding down, and that could drag Asian stocks lower too. It has been an uncommonly long time since the last market correction, which ended nearly two years ago.

The analyst says shares were sold in the afternoon because investors remain cautious due to another rise in the U.S. long-term interest rates that triggered the selloff.

Benchmark 10-year notes were last down slightly in price to yield 2.8054 percent, from 2.766 percent late on Monday. That raised the alarm about higher inflation and, with it, potentially higher interest rates. Either way, that is going to slow down the economy. The last such decline came in early 2016, when oil prices were plunging as investors anxious that slowing global growth might sharply reduce demand.

"I think what you have is, this is a correction, not the start of an economic recession", said Brent Schutte, chief investment strategist of Northwestern Mutual Life Insurance Co.'s wealth-management unit. The markets have been unusually calm since late 2016, and he said investors were betting that would continue. Schutte said that as central banks stop propping up the market, trading will probably be more volatile in the next few years.

Andrew Zimbalist, an economist at Smith College in MA, said the volatility in the United States - and the impact on Asia - was "not surprising in the least" given what's been happening. Brent crude, the benchmark for worldwide oil prices, lost 82 cents, or 1.2 percent, to $66.80 a barrel in London.

United States crude futures traded at $63.53 per barrel, down 1.0 per cent in Asia. The broader Topix dropped 4.6 per cent to 1,740.32.

The dollar index last rose 0.13 percent, with the euro up 0.06 percent to $1.2384.

The Nikkei 225 share average jumped 3.2 percent to 22,303.88 in midmorning trade, after stumbling 4.7 percent on Tuesday amid a global equities rout. The British FTSE 100 index fell 2.6 percent.

Sharp drops on Friday and Monday erased the gains the Dow and S&P 500 made this year. That was its biggest loss since August 2011, when stocks were reeling as investors fretted over European government debt and the U.S. credit rating was downgraded after the debt ceiling impasse.

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