Asian markets were broadly lower on Tuesday after a tumultuous day on Wall Street on Monday which sent the S&P 500 to fresh 2018 lows. Japan’s Nikkei 225 was trading down 1.70 percent as of 1:37 p.m. HK/SIN. The Shanghai Composite was down 1.13 percent and the Shenzhen Composite was down 1.34 percent. Australia’s ASX 200 eased 1.22 percent and South Korea’s Kopsi was 0.72 percent lower.
The selloff was prompted by renewed fears about the state of the global economy following an announcement from the National Association of Home Builders that the Housing Market Index in the United States hit a 3 ½ year low. This distressing housing data came after disappointing reports from Europe and China last week, giving traders reason to be concerned about the state of the global economy.
On Monday, the S&P 500 fell as much as 2.5 percent to a low not seen since October 2017, before rebounding slightly and closing down around 2 percent. The NASDAQ closed down 2.2 percent for the day. The Dow Jones Industrial Average posted a second consecutive day of losses, with the losses totaling over 1,000 points. According to CNBC, the Dow and the S&P 500 are now on track for their worst December performance since the Great Depression in 1931.
Traders are now looking toward the Federal Reserve which will end its two-day policy meeting tomorrow, when it is expected to raise interest rates for the fourth time this year, despite criticism from President Trump. The Fed is expected to continue raising interest rates into next year, though some analysts expect a reduction in rate hikes due to the turbulence in the global economy.
Oil prices were also lower on Tuesday, with traders worrying that the global economic slowdown would reduce demand. U.S. WTI futures were down 1.48 percent to $49.14 per barrel and Brent crude future were down 1.44 percent to $58.75 per barrel. Tuesday’s morning losses were the third consecutive session of losses for oil. Both benchmarks have fallen over 30 percent since October, with the decline due largely to increasing production in the U.S. and falling demand due to the trade war between the U.S. and China.