Global stocks are in a tailspin, with equity benchmarks in Asia and the Gulf deep in the red along with equities futures in Europe and the US as the war in the Middle East continues.
The turmoil across asset classes is fuelling the equities white-knuckle ride, with oil marching towards $120 per barrel, causing fears of inflation and a global economic slowdown. The US dollar has gained, while gold fell and Bitcoin swung between gains and losses.
Earlier in the day, Asia’s benchmark share index fell as much as 5.6 per cent, the largest drop since April, with South Korea stocks slumping about 8 per cent and Japanese shares shedding as much as 7 per cent.
Japan's Topix index ended trade 5.6 per cent lower, Hong Kong's Hang Seng fell 2.5 per cent and The Shanghai Composite Index fell 1 per cent.
Stocks in Australia also fell with S&P/ASX 200 dropping 3.6 per cent. BSE Sensex Index, the equities benchmark in India also slumped 2.48 per cent as investors considered the prospects of higher oil prices on India’s energy import-dependent economy.
Gulf stocks
Markets in the Gulf region, which took a hammering last week amid Iran’s attacks, continued to slide, with Dubai Financial Market leading losses.
The equities benchmark of the emirate, the DFM General Index, was down 3.9 per cent at 11.00am UAE time, with property and banking stocks dragging it down.
Emaar Properties, the largest developer in Dubai by market value, declined by 4.6 per cent, Deyaar Development retreated 4.7 per cent, while Union Properties and contracting company Drake & Scull dropped 4.9 per cent each.
Banking stocks were led lower by Dubai Islamic Bank, which fell 4.6 per cent, while Emirates NBD declined about 3 per cent.
In Abu Dhabi, transport, banking and property stocks pulled the benchmark index lower.
Aldar Properties, the largest listed developer in the UAE capital and RAK Properties both slid 4.9 per cent each. AD Ports Group was down 4.96 per cent, while Abu Dhabi Islamic Bank also retreated more than 4.9 per cent.
Elsewhere in the region, equity markets remained mixed with stocks in Doha and Saudi Arabia posting losses. Doha's QE Index slipped 1.67 per cent, while Saudi Arabia's Tadawul All Share Index fell 0.12 per cent.
Meanwhile, the benchmark in Oman advanced by 2.2 per cent, while Bahrain remained unchanged during early trade.
No signs of easing
US and Israel launched their military campaign against Iran on February 28, hitting targets across the length and breadth of the country. In retaliation, Tehran has fired drones and missiles at Arab nations across the Middle East, intended to hit US interests and Washington's allies in the region.
The relentless bombing by the US and Israel, which also killed Iranian supreme leader Ayatollah Ali Khamenei, has caused one of the worst conflicts in the Middle East, leaving global financial and energy markets in a state of flux.
On Monday, Iran named Mr Khamenei’s son Mojtaba Khamenei as the new supreme leader of Iran. Israel has the said any new leader of Iran will be target of execution. Iran has refused to bow down and it’s military said it can continue the intense war with Israel and the US for months.
“The worst is yet to come in the stock market reaction,” Bloomberg quoted Michael O’Rourke, chief market strategist at Jones Trading as saying. “I would expect more of a risk-off mood until we get some tangible positive news.”
Sell-off continues
The sell-off in Asia is a continuation of across-the-board slides in the wider Middle East as well as the US and European equities last week.
The US benchmark S&P 500 index settled 1.33 per cent lower on Friday, while technology heavy Nasdaq Composite Index dropped 1.59 per cent at close. Dow Jones Industrial Average Index slumped about 1 per cent.
The FTSE 100 Index in London also lost 1.24 per cent while stocks in Germany settle 0.94 per cent lower last week.
“Major US and European equity indices fell sharply, reflecting risk-off sentiment, while UAE equity markets also came under significant pressure,” Edward Bell, acting group head of research and chief economist at Emriates NBD said.
On Monday, Equity-index futures for the US and Europe slid more than 2.5 per cent indicating the Asian sell-off is set to expand.
The S&P 500 futures fell 2 per cent at 8:57am UAE time, Nasdaq 100 futures 2.19 per cent. In Europe, euro Stoxx 50 futures fell 2.9 per cent while FTSE 100 futures fell 1.34 per cent.
Investors flocked to the dollar as a safe store of value, with the Bloomberg Dollar Spot Index rising 0.5 per cent. However, spot gold fell 1.5 per cent to $5,096.42 an ounce, while Bitcoin recovered from earlier losses to trade 0.6 per cent higher at $67,249.90.
