Yellen Inspires Fresh Rout on Global Stock Markets
World stocks slumped Thursday, gripped by another fierce sell-off after a warning by Federal Reserve boss Janet Yellen over the global economy, while oil fell close to 12-year lows.
New York's Dow Jones Industrial Average sank overnight as Yellen also played down the chances of another U.S. interest rate hike any time soon.
The news sparked a renewed sell-off in Asia on Thursday, with Hong Kong stocks tumbling as investors played catch-up after a three-day break for the Chinese New Year.
The intense selling spilled over into Europe, with Athens shedding six percent and Milan diving five percent at one stage, while Paris was down 3.1 percent in early afternoon deals.
Frankfurt and Madrid stocks also slid by more than three percent at one point, while London retreated 2.0 percent.
- 'Panic on Europe's doorstep' -"The Fed chair inspired a wave of panic late in the American session that has fed through Asia and turned up on Europe’s doorstep," Spreadex analyst Connor Campbell told Agence France Presse.
He added that "a lack of sufficient dovishness paired with gloomy comments on the global outlook" had reignited investors' recession fears.
U.S. oil prices dipped close to a 12-year low underneath $27 per barrel, plagued also by chronic oversupply.
Sentiment soured further as Australian mining giant Rio Tinto posted an annual net loss of U.S.$866 million (768 million euros) and blamed the "highly challenging environment" as commodity prices plunge and China's economic slowdown bites.
The dire result compared with a U.S.$6.53 billion net profit in 2014.
The company also dumped its progressive dividend policy, in which shareholders are given gradually higher payouts.
That sent Rio Tinto's share price plunging 4.14 percent 1,692 pence.
Swiss-based miner Glencore topped the fallers board in London after posting a 6.0-percent drop in fourth-quarter copper output.
Glencore shares plummeted 6.4 percent to 87.54 pence.
"Global growth concerns have left natural resources stocks languishing (with) Rio Tinto taking the biggest hit after announcing a change in dividend policy," noted analyst Tony Cross at traders TrustNet.
Back in Asia, Hong Kong stocks slumped almost four percent to their lowest levels since June 2012.
On the first trading day of the Year of the Monkey, Hong Kong also slid on concerns about riots in the city this week that saw police battle street sellers, injuring several people. Analysts said the clashes could harm tourism.
- Dollar hits 15-month yen low -There were sharp losses on other Asian markets, with Seoul closing almost three percent down and Singapore off 0.8 percent, while Wellington also sank. However, Sydney rebounded on bargain-buying.
Tokyo, Shanghai and Taipei were all closed for public holidays.
The dollar sank heavily against the yen after Yellen's testimony to Congress, and tumbled further on Thursday to strike 110.99 yen -- the lowest since late October 2014.
While she made no explicit comments on the Fed's plans to lift rates -- after December's rise -- her description of clouds looming over the U.S. economy was taken as a hint there will be no increase in the immediate future.
U.S. benchmark West Texas Intermediate meanwhile slid Thursday to $26.52 per barrel, which was very close to the 12-year low of $26.19 hit on January 20.
- Key figures around 1130 GMT -London - FTSE 100: DOWN 2.0 percent at 5,558.2 points
Frankfurt - DAX 30: DOWN 2.1 percent at 8,829.4
Paris - CAC 40: DOWN 3.1 percent at 3,935.4
Milan - FTSE MIB: DOWN 4.4 percent at 15,978
EURO STOXX 50: DOWN 3.0 percent at 2,706.2
New York - Dow: DOWN 0.1 percent at 16,014.38 (close)
Hong Kong - Hang Seng: DOWN 3.9 percent at 18,545.80 (close)
Tokyo - Nikkei 225: Closed for a public holiday
Euro/dollar: UP at $1.1323 from $1.1286 on Wednesday
Dollar/yen: DOWN at 111.53 yen from 113.40 yen
Source: Agence France Presse
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