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Stock markets fall 0.5% in minutes, leaving traders perplexed

FILE PHOTO: FILE PHOTO: A passersby wearing a protective face mask is reflected on screen displaying the Japanese yen exchange rate against the U.S. dollar and stock prices at a brokerage, amid the coronavirus disease (COVID-19) outbreak, in Tokyo, Japan November 6, 2020. REUTERS/Issei Kato/File Photo

LONDON (Reuters) – U.S. and European stock markets saw a sudden 0.5% drop in hefty volumes around 1130 GMT on Tuesday, leaving traders scratching their heads and one calling it a “micro flash-crash”.

Nasdaq stock futures fell 0.5% in four minutes while the S&P 500 e-mini futures fell 0.4%. They later added more losses to trade 0.9% and 0.6% lower respectively.

Europe’s benchmark STOXX 600 index also turned negative during the quick-fire selloff and was last trading 0.8% lower.

“Not a great deal of movement in other assets but equity futures hit an air pocket,” said an equity sales trader based in London. “Looking at the price action and volume, a sense the machines took over for a second and resulted in a micro flash-crash.”

The volatility appeared to boost demand for safe-haven bonds, with the 10-year U.S. Treasury yield dropping almost 2 basis points to 1.591% before creeping back above 1.6%.

Reporting by Thyagaraju Adinarayan in London, additional reporting by Ben Blachard in Taipei; Editing by Dhara Ranasinghe and Catherine Evans

https://static.reuters.com/resources/r/?m=02&d=20210504&t=2&i=1560819972&r=LYNXMPEH4301D&w=800

Source: Reuters

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