Global stocks extend losses

Agence France-Presse . London | Published: 22:27, Jan 28,2021


Global stocks fell further on Thursday as investors tracked surging coronavirus infections, vaccine worries, a stuttering economic recovery, and the plight of troubled US retailer GameStop, dealers said.

Asian equities extended losses after Wall Street shed more than 2 per cent overnight, following a gloomy Federal Reserve warning over the virus-plagued US economy.

Hong Kong stocks plunged on Thursday in line with a global selloff fuelled by profit-taking from a recent rally, while investors also fretted over spiking virus infections, slow vaccine rollouts and a stuttering economic recovery.

The Hang Seng fell 2.55 per cent, or 746.76 points, to 28,550.77.

The benchmark Shanghai Composite Index sank 1.91 per cent, or 68.17 points, to 3,505.18, while the Shenzhen Composite Index on China’s second exchange dropped 2.82 per cent, or 68.16 points, to 2,352.75.

Tokyo’s benchmark Nikkei index closed down more than 1.5 per cent on Thursday with investors disheartened by a bruising session on Wall Street.

The Nikkei 225 fell 1.53 per cent, or 437.79 points, to 28,197.42, while the broader Topix index lost 1.14 per cent, or 21.22 points, to 1,838.85.

London sank 1.1 per cent nearing midday, while Frankfurt slid 0.7 per cent and Paris dropped 0.2 per cent in early afternoon trade.

In early trade, London’s benchmark FTSE 100 index lost 0.9 per cent at 6,508.14 points, Frankfurt’s DAX 30 shed about 1.0 per cent to 13,489.33 and the Paris CAC 40 declined 0.8 per cent to 5,416.33.

After a months-long rally sent several indices to records or alltime highs, investors have started to fret in recent weeks about a possible correction.

‘Stock markets have continued their run of losses from yesterday, as the market rally faces its first real test,’ said analyst Chris Beauchamp at trading firm IG.

‘For a global stock market that has enjoyed such solid gains since November such weakness should not be surprising, but as ever the speed of the drop has come as a surprise.

‘The overall rally had slowly lost momentum in recent weeks, and the laws of physics have finally taken effect — what can’t keep going higher has to fall,’ Beauchamp added.

Sentiment was also battered by struggling video game retailer GameStop.

The US group saw its stock surge about 1,000 per cent in two weeks after a group of amateur investors active on online forum Reddit banded together to fight the Wall Street funds that had previously pushed its price lower.

‘Equity markets are lower again as fears that some hedge funds are scrambling to close out positions in a bid to offset painful losses they incurred when shorting certain stocks that underwent enormous rallies,’ added analyst David Madden at CMC Markets UK.

‘The Gamestop saga has sparked worries that certain investment firms are rushing for the exit to obtain cash to nurse any painful losses they are enduring.

‘Within the past 24 hours, the mood has changed a lot as there is now a feeling that stocks across the board are in for further losses as a cut-and-run mentality is being adopted by some dealers,’ Madden added.

The dollar, meanwhile, steadied after the Federal Reserve warned that the US economy was struggling in the face of a new wave of COVID-19 infections that is hammering the northern hemisphere and forcing governments to reimpose strict containment measures.


The Fed said that the ‘pace of the recovery in economic activity and employment has moderated in recent months’ and said it would maintain its ultra-loose monetary policy for the foreseeable future.

Chair Jerome Powell added that ‘overall economic activity remains below its level before the pandemic, and the path ahead remains highly uncertain’.

Meanwhile, worries about COVID-19 inoculations are rife, with the US and Europe struggling to get their programmes into gear owing to supply problems.

The European Union and Britain are locked in a row over access to AstraZeneca’s jab, with both sides insisting the company uphold contractual delivery promises.

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