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On Thursday, the Nasdaq Composet plummeted 3.1 per cent, the biggest slide in three years. The S&P 500 index, which had last week twice scored record highs, fell by 2.09 per cent to 1883.08.
The Dow Jones Industrial average also slid by 1.62 per cent to 16,170.22 by the end of trading as stock values in the biotechnology and Internet sectors dropped.
In Asia on Friday, South Korea’s Kospi fell 0.9 per cent to 1,989.88, while Hong Kong’s Hang Seng dropped 0.7 per cent to 23,033.68.
Meanwhile, China’s Shanghai Composite Index fell 0.6 per cent to 2,121.71. Stocks in Australia, Taiwan and other regional markets also dropped.
The drastic sell-off of tech and biotech stocks comes on fears that China’s economic dynamo may be slowing down while billions of dollars in emerging markets are slowly being returned to major economy countries, such as in the G7.
On Thursday, China’s General Administration of Customs (GAC) said that exports had slumped 6.6 per cent to $170.11 billion in March.
Imports were down 11.3 per cent to $162.41 billion and total foreign trade volume declined 9 per cent to $332.52 billion, .
The trade balance returned to a surplus of $7.71 billion in March after a deficit of $22.98 billion the previous month, authorities said.
Despite a US Department report Thursday which indicated that the number of people seeking unemployment benefits had dropped to the lowest level since 2007 (before the sub-prime mortgage crisis which triggered global recession), investors are still wary that the Federal Reserve may be tapering off its stimulus programme faster than markets can deal with.
In the meantime, investors will be looking to next week’s report on China’s first quarter economic bank to see if the Central Bank will take action to boost growth, and if the Chinese government will show greater flexibility regarding relaxing of private investment restrictions.
Investors are also anticipating some kind of Chinese stimulus programme that will ease lending and support infrastructure.
According to a statement from the China Securities Regulatory Commission, companies on the Shanghai Stock Exchange 50 A-Share index were allowed as of March 21 the option to sell preferred stock in a bid to raise financing.