Wall Street and European sell-off deepens, Bank of England warns of faster rate hikes

Updated February 09, 2018 07:27:26

Volatility has spiked again, as the global sell-off returned to sink the European and US stock markets.

The London, Paris and Frankfurt indexes tumbled overnight, with falls between 1.5 and 2.5 per cent.

During the European session, the Bank of England voted unanimously to keep British interest rates on hold.

But the UK central bank warned rates may need to rise sooner, and by more than it had previously expected, due to an improving global economy.

What happened on Wall Street?

The Dow Jones has fallen sharply by 650 points (2.6 per cent) to 24,243.

The S&P 500 has dropped 2.3 per cent, and the Nasdaq had a steeper fall of 2.5 per cent.

Once again, rising interest rates are behind the continuing market wipe-out.

US 10-year government bond yields lifted as high as 2.88 per cent, its highest level in four years.

In addition, markets are also concerned about the prospect of higher inflation as the US economy strengthens.

Australian market today

ASX futures have dropped by 64 points, or 1.2 per cent, which points to a steep tumble for Australian shares this morning.

The Australian dollar is weaker across the board, hovering just above 78 US cents.

It is also buying about 56 British pence and 63.6 euro cents.

In local economic news, the Reserve Bank will today release its monetary policy statement.

The RBA will explain its current outlook for the economy, and why it kept interest rates on hold — at the record low 1.5 per cent this week — for the 16th month in a row.

ABC/wires

First posted February 09, 2018 07:25:03