Market turmoil: Dow Jones falls 99 points after Yellen testimony - as it happened
Fed chair has warned that turmoil in global financial markets could knock the US recovery, and hinted that interest rates will only rise gradually
Earlier:
- European shares rallied, FTSE gained 40 points
- Deutsche Bank shares up, but problems remain
- Australia dragged into bear market
10.39pm GMT
That's all for tonight, after another lively day. A quick reminder of the key points.
Federal Reserve chair Janet Yellen has warned that the turmoil in the markets could hurt the US economy. She hinted the interest rates will only rise slowly, but tried to dampen speculation that the Fed could cut borrowing costs. Here's our summary of her testimony to Congress.
10.28pm GMT
It now seems pretty unlikely that the Fed will risk raising interest rates in March, for fear of throwing fuel on the fire.
Our economics editor, Larry Elliott, says:
As most analysts spotted, the key phrase in Janet Yellen's testimony was when she said conditions in the US had become "less supportive of growth". That suggested a Fed belief that the drop in share prices will slow the economy but not derail it completely.
Yellen's wait-and-see approach means that a March increase in interest rates is now off the agenda, but the Fed will require more evidence before abandoning its strategy of cautious tightening. With the spectre of 2008 looming larger, that evidence may not be long in coming.
Related: There wasn't much Yellen could say that wouldn't have spooked the markets
10.15pm GMT
Here's our US colleague's Jana Kasperkevic's take on Janet Yellen's testimony:
Related: Janet Yellen hints further rate rises on hold amid plunging markets
In her first major speech for two months, Yellen sought to tread a fine line, acknowledging the threat posed by the financial tremors while at the same time pointing out that the US had continued to recover from the deep recession of 2008-09.
The Fed chief said: "The economy is in many ways close to normal." Specifically, Yellen pointed out that the unemployment rate had declined to below 5%, which many of her Fed colleagues consider to be full employment, and that inflation was likely to move up to 2%.
9.43pm GMT
Janet Yellen makes the front page of the Financial Times, with her warning about deteriorating financial conditions threatening the US recovery:
Thursday's FT front page:
Yellen's economy warning dims prospects of near-term rate rise#tomorrowspaperstoday pic.twitter.com/EbMVWdL33G
9.07pm GMT
Another turbulent day in the financial markets is over!
And the Dow Jones index has finished in the red, losing 99 points or 0.6% to finish at 15,914, as investors digested Janet Yellen's testimony.
Rocky day on Wall Street: Dow closes down about 100 points, S&P erases gains
8.57pm GMT
Janet Yellen's hearing at Congress was also attended by a group of protesters from the Fed Up campaign, who oppose December's rate hike.
Wearing green t-shirts reading "Recovery, What Recovery?", they sat behind the Fed chief during the session in a reminder that the public aren't too happy about economic conditions right now.
Fed Up demonstrators show up at @FinancialCmte hearing to sit right behind Yellen.
8.48pm GMT
A quiet end to the session? That would be too much to ask.
A sudden bout of selling has hit Wall Street, sending the Dow down around 100 points, or 0.6%....
Dow briefly drops 100 points S&P also briefly negative https://t.co/nvFP7XI9i3
8.06pm GMT
The dollar has fallen against the yen, hitting a 15-month low.
That indicates traders are calculating that the Fed will be more cautious about interest rate rises, after Yellen said financial conditions had become less supportive for growth.
8.01pm GMT
Yellen also managed to reassure investors, says Richard Sichel, chief investment officer of Philadelphia Trust Co.
Sichel told Reuters that the Fed chair managed to spur some bargain hunting, even through she also flagged up economic risks:
"What Yellen said has been taken positively.
Stocks in general are cheaper now than they were three days ago or three months ago, so there's an opportunity to step in."
7.59pm GMT
Cornerstone Macro analyst Roberto Perli believes
Janet Yellen managed to leave her monetary policy options open, even though few investors expect many rate hikes this year.
Perli says:
"The general message she intended to deliver is that additional rate hikes remain the base case, but markets have to stabilize before we see more."
7.26pm GMT
The US stock market is holding onto its earlier gains, after Janet Yellen completed her appearance at Congress.
Her acknowledgement that a Chinese-centred slowdown is detrimentally impacting US growth expectations was offset by yet another reference to a plan for steady and gradual rate rises going forward.
7.24pm GMT
A few photos of today's session:
6.57pm GMT
Capital Economics says that Janet Yellen is still more hawkish about interest rate policy than the markets.
They write:
Fed Chair Janet Yellen's testimony to Congress today revealed that, while the FOMC might not be ready to raise interest rates for a second time in March, she still anticipates a "gradual" series of rate hikes over the next couple of years.
That view is clearly at odds with futures markets, which imply that any additional rate hikes are almost now off the table.
6.30pm GMT
Let's recap the main points from today's hearing at the Financial Services committee over the last three (long...) hours.
"These developments, if they prove persistent, could weigh on the outlook for economic activity and the labour market, although declines in longer-term interest rates and oil prices provide some offset."
"With inflation so far below objective, we would carefully watch incoming data and revise our expectations." #YellenTestimony
"I am not aware of anything that would prevent us from doing it but I am saying that we have not fully investigated the legal issues - that still needs to be done."
It is fairly clear that the Fed has thought less about negative interest rates than markets believe they have.
"There are some hopeful signs but I think if the labor market continues to progress we are very hopeful we will see faster progress on wages."
"We will consider it and get back to you." - Yellen on @RepSeanDuffy #question on release of transcripts on #FedLeak https://t.co/azpU8INKHm
Yellen got a critique of Fed policy in the form of a poem: https://t.co/CapAB5yF22 pic.twitter.com/TbPREO68Sg
6.15pm GMT
Congress chair Jeb Hensarling says members have five days to submit further questions for Yellen to respond to.
And with that the meeting is adjourned.
6.14pm GMT
John Delaney of Maryland says when rates were raised in December, it was based on an improving economy. A lot has happened since then in the markets. When you look at the data now, does it change your view on economic activity and gowth
Yellen: The answer is maybe, but the jury is out. We continue to see progress in labour market. GDP growth clearly slowed a lot in the fourth quarter. My expectation is it will pick up in this quarter but financial conditions have tightened which could have implications.
6.06pm GMT
Andy Barr of Kentucky is asking about the Consumer Financial Protection Bureau and its funding.
Yellen seems unsure of the answers, and starts packing her bag.
6.00pm GMT
Keith Ellison of Minnesota also brings up the subject of the high levels of black unemployment. He says this needs the attention of the Fed chair. Is there adequate discussion of Afro-American workers within Fed discussions and if not, what can be done.
Yellen: It is of course important we look at different groups, particularly those suffering most in the labour market. Our tools are not ones that can be targeted at particular groups in labour market.
5.51pm GMT
Congressman Ed Perlmutter of Colorado ( a Democrat) praises Yellen (and the President) and asks how we can do better.
Yellen: Our objective is to try to make sure the picture shows continuing improvement. The signs of wage growth increasing are tentative but hopeful.. and we will try to keep that progress growing. Inflation [should] move up over time [towards our target].
5.45pm GMT
Robert Pittenger of North Carolina says the economic recovery is dismal despite all these accommodative policies. Is real unemployment not 10% not 4.9%?
Yellen barely gets a chance to begin answering before Pittenger steps in again and his time runs out.
5.36pm GMT
Wiliam Clay of Missouri says the Fed is more focussed on inflation than unemployment.
Yellen: We have both targets and take issue with idea we are not focussed on the unemployment objective... We continue to have accommodative monetary policy.
5.33pm GMT
Mia Love of Utah asks about implications of European financial instability, and ECB and Fed using different policies
Yellen: The ECB is dealing with inflation falling well beyond their goal...US has done better, is among the strongest economies. It's put [upward] pressure on dollar, harming manufacturing and exports.
5.26pm GMT
Maxine Waters is back and is back with the topic of big banks receiving support from the Fed.
Yellen: It's an essential tool we need to adjust the rate of short term interest rates. We have 2.5trn dollars of reserves compared to 20 to 30 billion during the financial crisis.
5.04pm GMT
David Scott of Georgia disagrees when Yellen says Fed can't target unemployment, pointing out the large unemployment rate among Afro-Americans. He says Fed has historically downplayed unemployment, nor has Fed ever had an Afro-American as head of one of the regional Fed banks.
Yellen: We recognise how serious the problems are and we take our employment mandate extremely seriously, we have been doing everything to promote a strong labour market which would benefit Afro-Americans.
4.57pm GMT
Ed Royce from California: Are negative rates a tool in the tool box? (He says a recent bank stress test from the Fed suggests this might be being looked at).
Yellen: ECB and Japan have gone to negative rates. We have had periods of market stress where we see flight into US Treasury bonds as safe haven. We have set stress tests for banks to look at if Treasuries go negative, this may happen without Fed necessarily setting negative rates.
4.52pm GMT
Ruben Hinojosa of Texas asks what else could we do to boost economy.
Yellen: Productivity growth has been disappointing since the financial crisis.
4.48pm GMT
Sean Duffy of Wisconsin, as head of oversight committee is complaining Yellen does not always respond to requests from the committee on compliance issues (in particular documents on possible leaks) and says she has ignored subpoenas.
Yellen: We have some concern with providing transcripts since they relate to monetary policy. We will consider this and get back to you.
4.40pm GMT
European markets are closing in positive territory but on Wall Street, the Dow Jones Industrial Average has now slipped back and is down around 12 points.
4.37pm GMT
Gregory Meeks of New York asks if Yellen thinks the position is better now than in 2008.
Yellen: I believe it is. We've made a lot of progress although there are a lot of challenges, a lot of households are suffering.
4.35pm GMT
Elsewhere oil is on the rise - Brent is now up 2.7% at $31.15 a barrel - after US crude stockpiles fell unexpectedly last week. Crude inventories dropped 754,000 barrels compared to expectations of a 3.6m barrel rise.
4.33pm GMT
Blaine Luetkemeyer from Missouri asks what Fed could do if there is another downturn.
Yellen says there are a number of tools including interest rates, but Luetkemeyer rightly points out that rates are almost as low as they can go (even with the recent hike).
4.29pm GMT
Brad Sherman of California: Are you going to break up the too big to fail institutions? To make sure it's not "too big to jail"?
Yellen: We are using our powers to make sure a systemically important institution could fail without having a systemic effect.
4.22pm GMT
Maloney asks: Given the market turmoil and slowing US economy, some analysts are suggesting a possible recession. What would it take to cut rates again?
Yellen: Our commitment is to achieve goals of maximum employment and price stability. I do not expect the FOMC (Federal Open Market Committee) will soon be in a situation to cut rates. The Labour market continues to perform well. Many of the factors factors holding down inflation are transitory. There is always a risk of recession, global developments could produce a slowdown, but don't want to jump to premature conclusions.
4.21pm GMT
Carolyn Maloney of New York asks: Has the turmoil in global markets changed your view on the pace of interest rate rises?
Yellen: We are watching very carefully what is happening in global financial markets. The stresses we have seen since the turn of the year relate to uncertainties over Chinese exchange rate policy, the price of oil..
4.00pm GMT
Patrick McHenry of North Carolina: Does Fed have legal authority to move into negative rates.
Yellen: The FOMC considered this around 2010, we were exploring our options. We decided not to lower interest rates into negative territory. Didn't fully look at legal issues. We would stilll need to investigate more thoroughly.
3.55pm GMT
Moore says is there moral hazard in not a single person involved in 2008 crash going to jail.
Yellen: I do not think individuals guilty of wrongdoing should escape appropriate penalties. We cannot put in place criminal penalties. We can make sure they are not allowed to work at banking organisations where they committed misdeeds, and in many cases they can be banned from working. We always co-operated with Department of Justice.
3.53pm GMT
Gwen Moore from Wisconsin is concerned about small banks. She asks how the rules should have been tailored for small banks, saying "stress tests, capital constraints are killing our small banks."
Yellen says: Community banks and their vitality are exceptionally important. The burden on community banks is intense. We are focussed on doing everything we can to reduce that.
3.50pm GMT
What will the world have to look like for a rule based system, asks Mulvaney.
Yellen says guidelines from rules are looked at but we should not mechanically follow rules, we need to take into account a large set of indicators.
3.48pm GMT
Following on from that, Mick Mulvaney asks if the economy is now normal.
Yellen says: The economy in many ways is close to normal... inflation is below 2% but there is a good reason to think it will move up over time.
3.45pm GMT
Maxine Waters asks what alternative processes could there be to the Fed paying billions to banks on excess reserves when it raises interest rates. The Fed uses IOER (interest on excess reserves) and Yellen defends the use of this system even though it pays commercial banks above market interest rates.
3.40pm GMT
Now for the questions.
Chair Jeb Hensarling brings up a recent bill that would require the Fed to follow a rules-based monetary policy, which Yellen opposes but a number of economists have backed in a letter. Yellen is against it because it could jeopardise its independence from political pressure.
3.36pm GMT
Markets are moving much higher now even though Yellen has just so far repeated her statement. The Dow Jones Industrial Average is currently up 151 points or 0.9%.
3.26pm GMT
Nice Fed chart of monetary policy divergence. pic.twitter.com/sHdcux2V3T
3.24pm GMT
(Unsurprisingly it's taking longer than five minutes - the statement is here if you want to follow along).
3.14pm GMT
Yellen now gets five minutes to present her testimony, and is reading her statement.
3.07pm GMT
The session is underway, and can be viewed live here.
Opening remarks come from chairman Jeb Hensarling - who says he will not use the session to criticise the Fed's decision to raise rates - followed by a number of members of Congress including Maxine Waters and Soth Carolina's Mick Mulvaney.
3.05pm GMT
Congress, waiting for Yellen.
2.58pm GMT
The US economy is strong enough to see through this period of turbulence, says economist Harm Bandholz at UniCredit after Yellen's testimony:
In a nutshell: Chair Yellen has, correctly in our view, highlighted the solid fundamentals of the US economy. Accordingly, her baseline outlook for both the economy and monetary policy have not changed. That said, recent developments in financial markets as well as in the global economy have clouded the picture. In this environment, Fed officials prefer to take a step back and wait. Once the clouds have lifted, the gradual normalization of interest rates will continue.
Yes, there are risks out there - and the longer the financial market rout lasts, the bigger the risk that it will become self-fulfilling -, but we believe that fundamentals are solid enough to carry the economy through this period. And this also seems to be the Fed's view. Accordingly, the fact that financial markets do not expect the next rate hike before the second quarter of 2017 seems well overdone.
2.43pm GMT
Well, it's not a ringing endorsement of Janet Yellen's comments but US markets have opened in positive territory.
The Dow Jones Industrial Average is currently up 59 points or 0.39%, while at the open the S&P 500 added 0.5%. But the tech-heavy Nasdaq has outperformed, up 1.1%.
2.27pm GMT
The dollar has reacted to Yellen's comments as if more rate rises this year - perhaps even in March - could indeed be on the cards despite the worries about global growth.
The US currency has risen 0.25% against a basket of currencies, up from a near four month low on Tuesday.
2.17pm GMT
Janet Yellen's testimony might appear to leave the door open for further rate rises, but she is likely to be quizzed sharply about the last one, says Rob Carnell at ING Bank. In his initial thoughts he says:
In summary - Yellen retains an open mind on the need for further tightening, though with a heavy skew of risks to the downside, and was defensive about the December rate hike:
The mercifully short prepared statement of Fed Chair Yellen to the House Committee on Financial Services did not contain much that was new from earlier speeches, statements or minutes.
2.14pm GMT
One interpretation of Yellen's remarks on rates is that she is admitting they were raised too soon, says Augustin Eden at Accendo Markets.
A not unusually muted reaction to Fed Chair Janet Yellen's testimony this afternoon, given that she's come out and said 'financial conditions in the US have recently become less supportive of growth.' It doesn't take a 1st class physicist to recognise that this is essentially another way of saying 'we raised interest rates before we should have.'
Nothing had fundamentally changed in December, but the Fed decided to ignore the fundamentals and move US monetary policy to a place that's less supportive of growth. It now appears the markets chose to ignore the Fed in January, preferring the fundamentals, and what do you know? The markets were right - they've been reacting to this testimony for the past four weeks.
2.08pm GMT
An economist's view on Yellen's comments:
Yellen: Maybe, maybe not, maybe, maybe not, maybe, maybe not, maybe, maybe not, maybe, maybe not, maybe, maybe not, maybe, maybe not
2.04pm GMT
Yellen also, as indeed she has to, defended the December decision to raise interest rates. Many have judged that to be a mistake, especially in the wake of the market turbulence and fears about global growth and stresses on the banks which have dominated the headlines so far this year.
Yellen suggested that if a pre-emptive rate rise was not implemented, a sharper increase may well have been necessary in the future which could have pushed the economy into recession:
The decision in December to raise the federal funds rate reflected the Committee's assessment that, even after a modest reduction in policy accommodation, economic activity would continue to expand at a moderate pace and labor market indicators would continue to strengthen.
Although inflation was running below the Committee's longer-run objective, the FOMC judged that much of the softness in inflation was attributable to transitory factors that are likely to abate over time, and that diminishing slack in labor and product markets would help move inflation toward 2 percent. In addition, the Committee recognized that it takes time for monetary policy actions to affect economic conditions.
1.56pm GMT
Janet Yellen has also said that the Fed would slow the pace of interest rate hikes, if the threats to the US economy materialise.
She tells the Committee on Financial Services that:
In particular, stronger growth or a more rapid increase in inflation than the Committee currently anticipates would suggest that the neutral federal funds rate was rising more quickly than expected, making it appropriate to raise the federal funds rate more quickly as well.
Conversely, if the economy were to disappoint, a lower path of the Federal funds rate would be appropriate.
1.53pm GMT
The full testimony is here.
1.51pm GMT
Janet Yellen has also touched on the big issue dominating the markets - how quickly will interest rates rise?
She sounds cautious, but neither rules anything in or out (classic central banker)
"The FOMC anticipates that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate.
In addition, the Committee expects that the federal funds rate is likely to remain, for some time, below the levels that are expected to prevail in the longer run."
Yellen hints of slower rate hikes, hewing to tone of gradualism, but does not signal Fed on hold.
Yellen acknowledges risks, but signals Fed on appropriate course--could move slower, but not turning back.
1.46pm GMT
Janet Yellen has also warned that "foreign economic developments" could harm the US economy.
In her testimony to Congress, the Fed chair singles out concerns about the slowdown in China.
These growth concerns, along with strong supply conditions and high inventories, contributed to the recent fall in the prices of oil and other commodities. In turn, low commodity prices could trigger financial stresses in commodity-exporting economies, particularly in vulnerable emerging market economies, and for commodity-producing firms in many countries.
Should any of these downside risks materialize, foreign activity and demand for U.S. exports could weaken and financial market conditions could tighten further."
1.38pm GMT
Newsflash: The Federal Reserve has just released Janet Yellen's prepared testimony, ahead of this afternoon's grilling from Congress in 90 minute time.
"Financial conditions in the United States have recently become less supportive of growth, with declines in broad measures of equity prices, higher borrowing rates for riskier borrowers, and a further appreciation of the dollar.
These developments, if they prove persistent, could weigh on the outlook for economic activity and the labor market, although declines in longer-term interest rates and oil prices provide some offset.
Against this backdrop, the Committee expects that with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace in coming years and that labor market indicators will continue to strengthen."
Yellen acknowledges less supportive Financial conditions but says job, wage gains should support income and spending
1.19pm GMT
Inequality is one of the issues of our age.
Bernie Sanders is building a presidential bid by fighting it, and charities like Oxfam regularly warn that the rich are taking more and more of the cake.
12.42pm GMT
European markets are sailing higher, up over 2% on average, reversing six days of steady losses which dragged them to a two year low.
Talk of Deutsche Bank doing an emergency bond-buyback to shore up its finances and relieve worried creditors has seen the German bank's shares rally by over 10%, lifting the rest of the banking sector.
In a way it's a bit of deju vu from yesterday when markets initially rose thanks to news from Deutsche Bank before financial and commodity sectors led to a spectacular roll-over. There is plenty of scope for another sharp twist in the direction of markets today around 3pm GMT when fed Chair Janet Yellen gives her testimony to the House Financial Services Committee.
Wednesday's City AM:
No Pressure, Janet#tomorrowspaperstoday #bbcpapers pic.twitter.com/fjQ80gWubF
12.25pm GMT
Investors can't get enough of Deutsche Bank today.
Its shares jumped 17% at one stage this morning, fuelled by reports that it will launch a debt buy-back offer soon.
Deutsche Bank is now up 17% today (but still down 33% in 2016) https://t.co/YqL8USEr2w pic.twitter.com/j6Feg2n65B
12.02pm GMT
It's been a bad morning for UK modelmaker Hornby.
We must save Hornby. Buy a train set today. Every home should have one. #ForTheNation https://t.co/G4mWonmv6W
11.39am GMT
This might dampen the mood in the markets.
"I am concerned about Ukraine's slow progress in improving governance and fighting corruption, and reducing the influence of vested interests in policymaking.
Without a substantial new effort to invigorate governance reforms and fight corruption, it is hard to see how the IMF-supported program can continue and be successful. Ukraine risks a return to the pattern of failed economic policies that has plagued its recent history.
11.30am GMT
Context is everything....
Deutsche Bank now only down 34% from the start of the year.
11.17am GMT
There are encouraging signs from New York.
Wall Street is expected to rally when trading begins, just over three hours time. The Dow Jones and S&P 500 are tipped to rise by 1%, while the Nasdaq is being called 1.6% higher.
11.07am GMT
The German government has reiterated that it is not worried about Deutsche Bank.
A finance ministry spokeswoman told reporters in Berlin that:
"You heard the short sentence that the minister [finance minister Wolfgang Schuable] said yesterday in Paris that he is not concerned, I don't have anything to add to that."
11.00am GMT
European banking shares are surging, lead by Deutsche Bank which has jumped by 15%.
Despite another poor session overnight, markets in the UK and Europe have rallied impressively. Banks are surging higher, with Deutsche shrugging off the woes of yesterday as investors take the opportunity to buy on weakness once again.
A better performance from the oil price and heavily oversold conditions in a number of markets, plus expectations regarding Janet Yellen's appearance later in the day have provided bulls with the chance to reverse some of the heavy losses seen so far in February.
One thing I remember abt 2008 was how markets would slump 2 or 3% on the back of no news, just sentiment. It's happening all over again
10.37am GMT
The head of Swiss bank Credit Suisse has launched a full-throated defence of the banking sector, in an attempt to calm fears of a new crisis.
"The banking system in general is much stronger than in 2008, 2009 [but] there are a lot of memories of that period.
"Some of the scenes we are seeing today are not justified . . . Banks are smaller, they are deleveraged, they are less risky, they are better capitalised."
Related: Credit Suisse boss says European banking panic is overdone
10.13am GMT
The slump in UK industrial production may show that Britain's economy is weaker than we thought.
Economist Howard Archer of IHS Global Insight explains:
December's sharp drop in industrial production will fuel concerns about the UK economic outlook as well as the unbalanced nature of growth.
It will also likely harden views that the Bank of England will not be raising interest rates during 2016. However, we believe it remains highly unlikely that the Bank of England will cut interest rates.
Ouch. Big fall in industrial production and manufacturing output in Dec. Significant chance Q4 GDP (0.5% in 1st estimate) is revised down
9.54am GMT
Ouch. Britain has suffered its biggest fall in industrial output since September 2012.
Ooooo - UK #industrial profit -1.1% in Dec...much worse than expected. Just like #german data yesterday
*ITALY DEC. INDUSTRIAL OUTPUT FALLS 0.7% M/M; EST. UP 0.3%
*FRENCH DEC. INDUSTRIAL PRODUCTION FELL 1.6% VS MONTH AGO
9.36am GMT
Shares across Europe are picking up pace, as investors shake off some of their gloom.
The FTSE 100 is now up 43 points, or 0.8%, and there are bigger gains over the channel. Germany's DAX has leapt by 1.8%, as worries over Deutsche Bank recede this morning.
"The rebound in Deutsche Bank is helping to reassure some investors who had been concerned about possible contagion in the banking sector."
it ought to be kept in mind that the markets want to be reassured. This injects a degree of wishful thinking into the equation. F
or her part, the Fed Chair will almost certainly refrain from plain-spoken commitment on the direction of policy.
9.26am GMT
Here's the worst-performing companies in Australia today, who helped to drag its stock market more than 20% below its recent peak.
9.10am GMT
Deutsche Bank is climbing higher!
*DEUTSCHE BANK EXTENDS RALLY FOR BIGGEST GAIN IN 4 YRS, UP 10.1%
9.06am GMT
The Wall Street Journal has a good take on how Australia's banks helped drag the country's stocks into a bear market today.
"This is the first sustained bear market I have seen since the GFC [global financial crisis]," said Evan Lucas, a market strategist at brokerage IG in Melbourne, noting the S&P/ASX 200 briefly was in bear territory in 2011.
Australia's major banks, which are some of the biggest stocks on the S&P/ASX 200 and have a large index weighting, have been caught in a global bank-share selloff this week, despite their having less exposure to liquidity risks compared with peers in the U.S. and Europe and substantially less reliance on the long end of the bond curve and wholesale funding, Mr. Lucas said.
8.48am GMT
Australia's fall into bear market territory today has sent another cloud of gloom over the City of London.
Conner Campbell of SpreadEx sums up the mood:
Once again the European indices are enduring the aftermath of a rocky Asian session, the Nikkei plunging to a 16 month low following a 2nd day of heavy losses, with the added concern of a bear market-entering night for the Australian markets thrown in for good measure.
A red-washed commodity sector is dragging the index down at the moment, though if Brent Crude can see a sustained climb above $31 per barrel (with the US crude inventories arriving this afternoon) sentiment may be able to shift as the day goes on.
8.36am GMT
Danish shipping and oil conglomerate A.P. Moller-Maersk is getting a kicking.
The perfect storm for shipping & #oil company AP Moeller-Maersk. Profits slump 38%, warns even worse 2016 .
8.22am GMT
Shares in Deutsche Bank have jumped by over 4% at the start of trading, amid rumours that it is planning new steps to reassure investors about its financial health.
The Financial Times set the hare running last night, reporting that:
Deutsche Bank is considering buying back several billion euros of its debt, as Germany's biggest bank steps up efforts to shore up the tumbling value of its securities against the backdrop of a broader rout of financial stocks.
After European banks suffered a second consecutive day of sharp falls, Deutsche Bank is expected to focus its emergency buyback plan on senior bonds, of which it has about a50bn in issue, according to the bank.
8.16am GMT
European stock markets are crawling higher in early trading, after two days of hefty falls.
Once again the FTSE-100 has kicked off the session with a modest bounce, recovering some of yesterday's gains in the process, but the underlying situation appears little changed.
Crude oil prices may be ticking higher but they are still in what could be termed 'distressed' territory below $30/barrel, although despite all this there's a definite air of risk-on returning to markets.
8.04am GMT
Japan's stock market also had a rough day, losing another 2.3% and sending the Nikkei to a fresh 16-month low.
One analyst said markets could be seeing the start of the "final capitulation" as the attempt by central banks to stimulate growth with cheap money since the global financial crisis in 2008 had run its course.
"The artificial support from central banks is at a crossroads," said Evan Lucas, of IG in Melbourne. "Central bank intervention will no longer create the holding pattern of the past year; markets now believe banks are out of ammunition."
Related: Stock market rout intensifies amid fears central banks are 'out of ammunition'
7.55am GMT
The heavy falls on the Australian stock market has triggered fears that we're entering another GFC, or Global Financial Crisis.
ABC News explains:
Stockbroker and author of Marcus Today, Marcus Padley, holds the view that this week's Australian bank sell-off is more about fear than reality.
"There is fundamentals and there is sentiment, and people are very fearful of another GFC-style event," he told ABC News Online.
7.51am GMT
Australia's stock market has been dragged into bear market territory as the the global market rout hit Asia again.
The country's benchmark index, the S&P/ASX 200, endured a rough day and finished down 1.2% at 4775.7 points.
Top Asian economies now in bear market. Australia ASX down 20% from peak. Japan Nikkei down 25% from peak.
Australia's shares close in bear territory ... ...but is it a buy opp? https://t.co/9LUF4nxqkX pic.twitter.com/RymgIJOqu4
Persistent fears about slowing global growth and the Chinese economy, the health of Europe's banking sector and concerns that Beijing and major central banks might not be able to turn things around have combined to rattle investors.
"What's the scary part about this is we can see things get pretty ugly, pretty quickly," said Evan Lucas, market strategist at IG in Melbourne.
7.39am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Hold onto your hats, because it's going to be another stressful day in the financial world.
Related: Shares dive as fears mount for health of global banking
Dare I say #FTSE and #DAX called to open fairly flat at present.
Eyes on the Feds Yellen testimony this afternoon.
U.K. Companies posting results today - Tullow Oil, Dunelm, BELLWAY, WS Atkins ARM Holdings, GW Pharma - US - Twitter, Expedia, Zynga, Humana
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