As stocks fall, the Wall Street rally comes to a halt.
On Wednesday, Wall Street’s record rise came to an end, and stocks around the world fell as the United States’ embargo on China Telecom and Germany’s downgraded economic outlook impacted on mood.
The Dow and S&P 500 both rose from their record closes at the opening bell, but subsequently sank again.
“Part of the constraint is due to a notion that the stock market is due for a stabilization period following such a large surge this month,” said Patrick J. O’Hare of Briefing.com.
“The lackluster move yesterday — following further positive earnings news — was a monument to that belief,” he continued.
Wall Street, and global markets in general, have recovered from September’s sell-offs, which were triggered by fears of rising inflation and the likelihood of tighter monetary policy.
In recent weeks, a solid corporate results season has provided much-needed support to investors, as corporations demonstrated resilience in the face of supply disruptions, rising commodity and wage prices, and rising Covid-19 cases.
Long-standing tensions between Washington and Beijing, however, continue to cast a pall over trading floors, with the two sides stuck in a standoff on a variety of topics including Taiwan, national security, technology, trade, and Hong Kong.
The tech sector was also in the spotlight after the US Federal Communications Commission on Tuesday revoked China Telecom’s US operating license, citing “significant national security and law enforcement risks.”
The move follows former US President Donald Trump’s crackdown on other tech giants such as Huawei and China Mobile.
It “looks to undermine previous optimism that US-China relations may be improving,” according to IG Asia’s Jun Rong Yeap.
The remainder of Asia was also in the red, as a faster-than-expected increase in Australian core inflation added to widespread concerns about rising global costs.
Investors are also keeping an eye on the property market in China, where some developers are struggling to meet their debt obligations, and industry major Evergrande faces a new deadline to avoid default at the end of the week.
In Europe, a revised government growth prediction of 2.6 percent for Germany this year depressed morale, owing partly to bottlenecks in global supply networks.
The DAX in Frankfurt sank 0.3 percent, while the CAC in Paris fell 0.2 percent.
Meanwhile, the British government raised its growth prediction for 2021 to 6.5 percent as part of its budget, but this did not help London stocks, which fell 0.3 percent.
The price of oil fell on Wednesday as a result of the. The Washington Newsday Brief News is a daily newspaper published in Washington, D.C.