Market focus

Share markets in Asia plunged to a 19-month low on Thursday after Wall Street’s worst losses in eight months led to broader risk aversion, a rise in market volatility gauges and concerns over overvalued stock markets in an environment of rapidly rising dollar yields. Equities sold off heavily in the US session as a combination of rising US Treasury yields and renewed trade war concerns unsettled stock markets. Fears over equity valuation have been lingering for a while and notably technology stocks were hard hit with Nasdaq down over 4%, but also Dow Jones and S&P500 down more than 3%.

Focus today will be on the equity market rout starting yesterday and continuing overnight in Asia. Developments in Italian bond markets also continue to be an important market driver. US CPI inflation is due, which is getting more focus due to the tight labour market and still strong growth. Inflation pressure generally seems to be rising in the US, as there are bottlenecks in the labour market and companies report very strong demand growth. US initial jobless claims are also being released and are expected to continue to hover around record lows.