Stocks slide overnight, Boeing shares sink

Weaknesses in mining, banking and tech shares helped drive the US market to 22-month lows yesterday. Photo / AP

Equity markets slid overnight amid renewed fears about global economic growth, bolstering the appeal of perceived safe-haven assets like US Treasuries and gold.

Spot gold climbed more than 4 per cent to touch US$1,247.98 an ounce, its highest level in a year. Silver and platinum also advanced.

"The safe-haven seekers are moving back," Julius Baer analyst Carsten Menke told Reuters.

"We recommend clients add gold to their portfolios as insurance, if things turn out really bad, there will be much more upside."

Hong Kong equity markets had their worst start to a lunar new year since 1994, according to Bloomberg, dropping 3.9 per cent.

Europe and Wall Street followed suit. In 12.54pm trading in New York, the Dow Jones Industrial Average sank 2.1 per cent, while the Nasdaq Composite Index dropped 0.9 per cent. In 12.40pm trading, the Standard & Poor's 500 Index shed 1.9 per cent.

Meanwhile, US Federal Reserve Chair Janet Yellen told Congress in a second day of testimony that the central bank was considering whether it might use negative interest rates, following the example of central banks elsewhere such as in the euro-zone.

"We had previously considered them and decided that they would not work well to foster accommodation back in 2010," Yellen said, Bloomberg reported. "In light of the experience of European countries and others that have gone to negative rates, we're taking a look at them again because we would want to be prepared in the event that we needed to add accommodation."

A plunge in Boeing shares, last 11.1 per cent lower, led the Dow lower. Shares of Goldman Sachs and those of JPMorgan Chase followed, last each 4.1 per cent weaker. Bucking the trend, Cisco shares soared 8.8 per cent for the biggest percentage gain among the only two Dow shares that were trading higher in early afternoon.

Boeing shares tanked after Bloomberg reported that the US Securities and Exchange Commission is investigating whether the company properly accounted for the costs and expected sales of two of its best-known jetliners.

The probe, which involves a whistleblower's complaint, centres on projections Boeing made about the long-term profitability for the 787 Dreamliner and the 747 jumbo aircraft, according to Bloomberg.

Meanwhile, the US jobs market keeps showing signs of strength. A Labor Department report showed that initial claims for state unemployment benefits fell 16,000 to a seasonally adjusted 269,000 for the week ended February 6.

"The economy might be sailing into a storm, the financial markets say, but if so, the US economy is in a very strong position to weather whatever comes, with the labour market the strongest in decades," Chris Rupkey, chief economist at MUFG Union Bank in New York, told Reuters.

In Europe, the Stoxx 600 Index finished the day with a 2.8 per cent retreat from the previous close, as bank and mining stocks fell again. The UK's FTSE 100 Index dropped 2.4 per cent, while Germany's DAX Index slid 2.9 per cent, and France's CAC 40 Index gave up 4.1 per cent.