While you were sleeping: UPDATED US stocks tumble, gold rises

A pummelling of big global banks and further selloffs in oil and tech stocks helped send gold prices to their biggest one-day gain in more than a year.

The Dow Jones Industrial Average fell as much as 401 points in a volatile session before closing with a loss of 177.92 points, or 1.1%, to 16,027.05.

The Nasdaq Composite Index shed 1.8% to 4283.75, while the Standard & Poor’s 500 Index declined 1.4% to 1853.44.

Investors snapped up haven assets, sending the yield on 10-year Treasurys to their lowest level in a year. Gold prices, up 13% this year, surged 3.5% to $US1197.90 an ounce.

On Wall Street,  shares of Morgan Stanley lost 6.9%, while Goldman Sachs Group stock fell 4.6%. Deutsche Bank shares fell 9.5% in Germany, dragging the country’s benchmark DAX index to a loss of 3.3%. 

“Investors can’t make up their minds about the global economy but the risk of recession and deflation is rising,” Francois Savary, the chief investment officer of Prime Partners, a Geneva-based investment manager, told Bloomberg. 

“It’s not enough that valuations have receded quite significantly and earnings haven’t been too bad – sentiment is very low and there isn’t much visibility right now. That’s frightening,” he said.

The turmoil has bolstered the level of scrutiny for US Federal Reserve chairwoman Janet Yellen’s semi-annual testimony to Congress on Wednesday and Thursday. 

“This will be one of the more closely watched and scrutinised testimonies in some time as the market tries to gauge whether March is still in play for another Fed rate increase,” wrote economists at RBC Capital Markets, Reuters reported.

“Given the lack of any real calming in the markets, we think the odds that Mrs Yellen heavily promotes a March move are slim.”

Oil falls below $US30 a barrel
As the price of oil dropped again – West Texas Intermediate crude fell 3.9% $US29.69 a barrel while Brent was down 3.5% at $US32.88 – so did shares of energy companies. 

Shares of Chesapeake Energy, a natural gas producer, sank as much as 51% amid reports it had hired restructuring lawyers.

The company said it had no plans to pursue a bankruptcy. The stock ended the session 33% lower.

Williams Cos, a gas pipeline company, dropped 35%. 

Tech stocks, including Facebook, Amazon, Netflix, and eBay, also slid amid concern about valuations.

"What you've seen regarding technology and other sectors is that the [higher] valuations are being ratcheted back down closer to the underlying fundamentals that are going to support their growth, if it’s there," Ryan Larson, head of US equity trading at RBC Global Asset Management in Chicago, told Reuters.

In Europe, the Stoxx 600 Index ended the session with a 3.5% decline from the previous close. The UK’s FTSE 100 Index sank 2.7%, France’s CAC 40 Index slumped 3.2%, while Germany’s DAX Index plunged 3.3%.

Bank stocks suffered some of the biggest hits in Europe.

The eurozone Sentix investor confidence index fell more than anticipated in February and sank to the lowest in more than a year.

UPDATED for the Wall Street close (10am NZ time)

(BusinessDesk)