NEW YORK: Traders work on the floor of the New York Stock Exchange (NYSE) yesterday. - AFP

LONDON/KUWAIT: A collective sigh of relief swept across global trading floors yesterday as bargain hunters swooped on Wall Street stocks, stemming a hemorrhage that had been spreading panic among investors. With Asian and European equity markets plunging, New York stocks started their trading day with another jaw-dropping fall as the Dow index dived nearly three percent, adding to the previous day's record-breaking loss. But within minutes a fierce battle appeared to be playing out between those betting on a further downturn and those who thought that the market correction had gone too far, leading to some wild price swings.

Meanwhile, bitcoin continued its spiral downwards after some banks banned their customers from buying it with credit cards. The news is the latest to hit the cryptocurrency after recent crackdowns by authorities in India, South Korea, China and Russia. A report in Al-Anbaa daily yesterday said approximately 12,000 investors in Kuwait have lost half the value of their portfolios trading in the volatile cryptocurrency market. Recent weeks have seen a widespread sell-off in the digital asset, with the value of bitcoin falling from its all-time high of $19,500 in December to below $8,000.

The collapse has been felt strongly in Kuwait, where investors reportedly account for 1.5 percent of the total value of cryptocurrencies. The average investment size is estimated at $10,000, which exploded in value to $70,000 by the end of the year. BitFils, a prominent local exchange, reported that Kuwaitis were buying bitcoin with their credit cards with an average monthly investment of $6,000, including commissions and other fees. One trader admitted that he had lost more than $20,000 in just 18 days.

Yesterday, the Kuwaiti stock index fell 1.3 percent to 6,624 points. "Traders don't know which way to turn as uncertainty is running high," said David Madden, market analyst at CMC. "The colossal range on the US indices sum up how irrational equity traders are at the moment, and while some go bargain hunting, others are fearful we could see another leg lower." Even as the Dow index gyrated in and out of positive territory, the feeling spread that the worst of the a brutal downturn was over. "Dow up! Panic over, as you were everyone," tweeted James Hughes, chief market analyst at AxiTrader, during a brief breather for the index. Jasper Lawler, head of research at London Capital Group, tweeted "Trader's paradise out there right now", in a reference to volatility which boosts brokers' earnings from trading fees.

European stock markets were helped off the day's worst levels by the Wall Street recovery, but remained deeply in the red at the close. The selloff striking fear in investors' hearts began last Friday when bright US non-farm payrolls data sparked concern that inflation will surge this year - and that the Federal Reserve will in response raise borrowing costs more quickly than anticipated. New York's Dow Jones Industrial Average saw its steepest ever one-day point drop on Monday, shedding a total of 1,175.20 points or a hefty 4.6 percent in value, while 10-year US Treasury yields set four-year peaks.

The downturn was so rapid that some investors wondered whether they were headed for a crash, but others welcomed what they saw as a reality check for an overbought market. "It's not doom and gloom, and it's not financial markets Armageddon; it's just a much needed and much overdue correction," AxiTrader's Hughes told AFP. "Markets usually grind to the upside, but fall like a rock," said analyst Naeem Aslam at trading firm ThinkMarkets. "Traders have been looking at the market for the past year moving in one direction which was skewed to the upside. Now, it's time for the bears to take their revenge."

Prior to the chaotic selloff, Wall Street had enjoyed an impressive record-breaking run ever since Trump's 2016 election on hopes over the US president's pro-business tax-cutting policies. Asia and Europe had meanwhile reaped bumper gains from the improving economic outlook. "If investors had been waiting for an opportunity to take profits, the prospect of higher than expected inflation and tightening by the Fed provided just that," Richard Hunter, head of markets at online stockbroker Interactive Investor, told AFP.

Yesterday, Tokyo stocks led a collapse throughout Asia, briefly diving almost seven percent before closing down 4.7 percent. Hong Kong lost more than five percent in its worst day since summer 2015, while Sydney and Singapore each sank three percent. - Agencies