Wall Street's dismal performance has had profound knock-on effects on global markets. Analysts have warned that the downward spiral is likely due to tariff-related effects on US companies, citing rising basic costs.
Asian stock markets opened in the red on Thursday, a day after technology stocks hit Wall Street with the largest daily decline since 2011 and wiped out all of this year's gains.
Japan's Nikkei index was down 3.3 percent at opening, shedding more than 700 points, while Hong Kong's Hang Seng index dropped by nearly 2 percent. Australia's leading benchmark, ASX 200, also fell sharply during morning trading, shedding more than 2 percent.
"Concerns that earnings growth may be peaking against an unsettled global backdrop and that fiscal stimulus will wane continued to weight on sentiment," said analysts at the Australia and New Zealand Banking Group (ANZ).
On Wednesday, key Wall Street indexes sank by more than 2 percent, further extending losses seen just the day before. The Dow Jones Industrial Average lost more 2.4 percent, losing more than 600 points to end at 24,583.42.
The Nasdaq Composite Index, known for its plethora of tech stocks, lost 4.4 percent to end at 7,108.40, its worst day in seven years. The indexes were pulled down by Amazon, Facebook and Netflix, all of which lost more than 5 percentage points in value, while Google-parent Alphabet plummeted 4.8 percent.
'Take a beating'
In a blog post by the Federal Reserve Bank of New York, economists predicted that US firms could be facing a bleak situation due to the Trump administration's tariffs on steel, aluminum and Chinese goods.
The economists said the tariffs would raise the cost of "producing goods for export … and make US exports less competitive on the world market." As such, "the end result is likely to be lower imports and lower exports, with little or no improvement in the trade deficit."
As that assessment becomes more of a reality, some analysts have warned that investors are unwilling to stomach the risk exposure.
"Costs are increasing and it's often tariff-related. We also reached a potential peak for earnings," said Nate Thooft, senior managing director at Manulife Mutual Funds, told AFP news agency, "Companies that show marginal weakness take a beating."
ls/ (Reuters, AFP)