In This Article:
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* S&P 500 futures fall further in Asia, Nikkei at 15-mth low
* Trump threatens partial US govt shutdown over wall funding
* Dollar skids on yen as investors flee to safe havens
* Oil near lowest in over a year, an added bonus to bonds
By Wayne Cole
SYDNEY, Dec 21 (Reuters) - Global stocks were sailing into Christmas on a sea of red on Friday as the threat of a U.S. government shutdown and of further hikes in U.S. borrowing costs inflamed investor unease over the economic outlook.
The S&P 500 was heading for its worst quarter since the dark days of late 2008, with a loss of 15 percent so far. The Nasdaq has shed 19.5 percent from its August peak, just shy of confirming a bear market.
Oil prices slid just over 4 percent overnight, bringing Brent's losses since its October top to 37 percent. And the dollar suffered its biggest one-day drop on the yen since November 2017 as investors stampeded to safe havens.
Michael McCarthy, chief market strategist at CMC Markets, said the downward spiral was becoming self fulfilling with selling begetting more selling.
"Negative momentum is a key factor in driving investor behaviour. Fundamental justifications are following the action," said McCarthy. "The selling will finish when it is done."
Early Friday, E-Mini futures for the S&P 500 were off another 0.25 percent, while MSCI's broadest index of Asia-Pacific shares outside Japan went flat.
South Korean stocks slipped 0.3 percent and Japan's Nikkei 0.5 percent.
The Nikkei had already hit a 15-month low on Thursday when the U.S. Federal Reserve largely retained plans to increase interest rates despite mounting risks to growth.
Markets were further spooked when U.S. President Donald Trump refused to sign legislation to fund the U.S. government unless he got money for a border wall, thus risking a partial federal shutdown on Saturday.
"Political brinkmanship in Washington is further heightening market uncertainty," said Westpac economist Elliot Clarke.
"Friday will be a tense day in Washington, and for financial markets, as a last-minute compromise is sought."
Adding to the air of crisis was news U.S. Defense Secretary Jim Mattis had resigned after Trump proposed withdrawing troops from Syria and sources said a military pullback from Afghanistan was on the cards.
The brittle mood showed on Wall Street where the Dow ended Thursday with a loss of 1.99 percent. The S&P 500 dived 1.58 percent and the Nasdaq 1.63 percent.
STAMPEDE FOR THE EXITS
The sea change in sentiment has triggered a rush out of crowded trades, including massive long positions in U.S. equities and the dollar and short positions in Treasuries.