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S&P/ASX 200 opens down but bounces above 5,800

S&P/ASX 200 opened lower as expected but has started to rally.
Picture of trading boards with downwards pointing arrow
S&P/ASX 200 is sitting around 5,800 after 40 minutes of trade

S&P/ASX 200 (ASX: XJO) (INDEXASX: XJO) opened this morning down around 100 points to 5,790.

10.40am: The ASX200 is trading at around 5,800

Energy and Utilities have been the hardest sectors hit this morning, both down over 2%.

Pre-market wrap: S&P/ASX 200 to open lower after 1,000 point fall in the Dow

The Dow Jones industrial Index (INDEXDJX:DJI) plunged 4.1% to close at 23,860 points.

Tech stocks were caught up in the fallout, and the NASDAQ (INDEXNASDAQ:IXIC) shed 3.9% to close at 6,777 points.

SPI Futures indicates 107 point decline in ASX 200

The SPI Futures was indicating a 107 point decline in the ASX 200 as US markets closed, but this is likely to increase as the late fall in the Dow is digested.

The acceleration in the downturn in the Dow towards the end of trading will prove all the more worrying for Australian investors.

Having fallen approximately 500 points with only 90 minutes of trading remaining, the sell-off escalated towards the close with the index finishing down 1032 points or 4.1%.

Based on sectors that were hardest hit overseas, ASX financials, energy and tech stocks look the most vulnerable today.

Dow closes below last week’s low

The close of 23,860 points is below last week’s trough of circa 24,150 points.

Based on stock movements in the US, the financial sector could be the subject of broad-based selling.

One of the worst performers in the US was American Express (NYSE:AXP) as it plummeted 5.6%.

Other losses across that sector were Visa Inc (NYSE:V) and JP Morgan Chase (NYSE:JPM), which were down circa 4%.

Tech stocks also were caught up in the sell-off with Intel Corporation  (NASDAQ:INTC) and Microsoft Corporation (NASDAQ:MSFT). falling 5.4% and 4.7% and respectively.

FTSE 100 sheds 1.5% on rate rise talk

FTSE 100 (INDEXFTSE:UKX) fell 1.5% to close at 7170 points after the Bank of England lifted its 2018 growth forecast from 1.6% to 1.8%.

In saying that inflation is likely to rise above 2% through to 2020 the BOE was seen as flagging both earlier rate rises and more substantial medium-term increases.

Mark Carney, Governor of the Bank of England, said: “It will likely be necessary to raise interest rates somewhat earlier and to a somewhat greater extent than we had thought”

READ: FTSE 100 closes firmly lower as strong pound weighs

Fall in crude prices adds to decline

In the course of trading in the UK, oil prices fell 1.4% to circa US$61.00 per barrel, prompting a sell-off in major oil stocks.

Royal Dutch Shell plc (LON:RDSB) was one of the biggest casualties, falling 2.1%.

Mining stocks also took a hit with Glencore PLC (LON:GLEN) and Rio Tinto PLC (LON:RIO) falling more than 3%.

Base metals mixed while gold gains ground

Zinc and lead were the best performers amongst the base metals increasing circa 1% and 1.4% respectively.

Copper and nickel both lost a little more ground after the recent sharp declines, but the extent of the falls was less than 1%.

Nickel closed at US$5.94 per pound and copper finished at US$3.09 per pound.

There was little movement in the iron ore price, and it is sitting at US$77.32 per tonne.

Gold hovered in and out of positive territory, but as US equities markets started to spiral the precious metal was well sought after, closing up 0.4% at US$1319 per ounce

The oil price continued its decline after UK markets closed, and was down circa 2.4% as US markets drew to a close.

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