Asian Markets In Panic As Japan Enters Bear Market Territory

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Asian markets finished the day on a negative note with Japan’s Nikkei erasing another 2.3% today to 15,713.39. The index has lost close to 20% since mid-2015, near bear market territory. The weakness in the Nikkei stems from a strengthening yen, which could potentially disrupt exports. This, despite unprecedented negative interest rates in the country.

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According to Chris Weston of IG, buying interest may return to the equity markets post the heavy sell-off witnessed this week. Australia’s ASX Index lost 1.15% to 4,826.50, where the energy space dominated market sentiment while India’s Sensex traded under pressure, shedding 0.76% to 23,837.82. The remaining indices TSEC 50, Hang Seng and Shanghai were closed on account of the Lunar New Year.

U.K. industrial output declines

Meanwhile, European markets regained positive momentum after opening the day negative.  The key factor in driving the European markets has been an uplift of sentiment surrounding Deutsche Bank (NYSE:DB). Speculation is high that the bank will take steps to boost confidence among investors about its financial health. The UK’s FTSE 100 added 1.1% so far while France’s CAC 40 and Dax are both up 2.3%. The Euronext is up over 2%. However, the markets are likely to remain cautious ahead of the statement from Federal Reserve Chair Janet Yellen today.

Apart from this, a fall in UK industrial production in December might also leave an impact. Industrial output in the UK fell 1.1%, pointing to sluggish economic demand. The decline came as a shock against the consensus view of a 0.3% increase. Even industrial output in France and Italy declined, which may further dampen the global economic outlook.

Elsewhere, U.S. markets closed marginally lower yesterday. The Dow Jones Industrial Average dipped by 0.08% to 16,014.38 and the S&P 500 (NYSEARCA:SPY) lost 1.23 points to 1,852.21. Traders have high hopes for positive words from the Federal Reserve today, which may help uplift the mood of the markets.

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