Mainstream Media Pushing a ‘Lasting Market Downturn’ Narrative


Stock Markets Sink, Suggesting Global Rout Will Last

The New York Times

The market sell-off in the United States ricocheted across the world on Tuesday, as investors from Tokyo to Hong Kong and London to Frankfurt voted with their feet and futures markets indicated the American stock market could be in for another tough day.

European markets opened sharply lower in morning trading after Asian markets were down at the close, with stocks in London, Frankfurt and Paris all declining. Japanese shares were down about 7 percent at one point before ending 4.7 percent lower, while markets in Hong Kong and Taiwan closed down about 5 percent. The selling was broad, hitting companies of all sizes across industries. An index of Chinese companies listed in Hong Kong dropped more than 6 percent at one point.

Market analysts digesting the numbers from Asia said they did not expect the selling to let up anytime soon. And Europe and the United States looked poised for similar selling. On Tuesday afternoon in Asia, futures that track major New York stock market indexes signaled a drop of about 1 percent.

Wall Street’s so-called fear gauge — known as the VIX index — shot up to its highest level since the summer of 2015, when a market sell-off in China prompted a global sell-off in markets. The index tracks overall market volatility.

Investors have mostly been spooked by concerns about the potential for rising inflation in the United States. Still, the share run-up of recent months has been global, and experts said a number of markets elsewhere were also due for a readjustment.

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This time around, the moves were set off by concerns of rising inflation in the United States. In China, markets were overheated after a steep rise since the start of this year, said David Cui, China equity strategist at Bank of America Merrill Lynch.

“Given how bullish the market has been positioning, there could be a reasonable period of adjustment,” Mr. Cui said, referring to Chinese stocks.

“It’s not going to be a two-day phenomenon,” he added. “If you take a few-months view, there is a chance this is the start of a decent correction.”

For some analysts, the sell-off was expected after stocks in Asia climbed to record highs in some cases.

“This is the beginning of more meaningful setback in a market that was, at least from the nonfinancial sectors, very overvalued and there was a lot of euphoria,” said Jonathan Garner, a global emerging market strategist at Morgan Stanley.

“I don’t think this is a ‘one-day’ that finishes today,” he added.


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