UPDATE 3-Stock markets fall 0.5% in minutes, leaving traders perplexed

Reuters

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 (Adds details from Taiwan defence ministry, quotes from
traders, updated prices)
    LONDON, May 4 (Reuters) - U.S. and European stock markets
saw a sudden 0.5% drop in hefty volumes around 1130 GMT (0730
EST) on Tuesday, leaving traders scratching their heads.
    Nasdaq stock futures  NQc1  fell 0.5% in four minutes while
the S&P 500 e-mini futures  ESc1  fell 0.4%. They later added
more losses to trade 2% and 1% lower respectively.
    Europe's benchmark STOXX 600  .STOXX  index also turned
negative during the quick-fire selloff and was last trading 1.1%
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." 
    However, others disagreed. 
    "Calling the wobble in the markets this morning a flash
crash is a bit of hyperbole," said Art Hogan, chief market
strategist at National Securities in New York. 
    The volatility appeared to boost demand for safe-haven
bonds, with the 10-year U.S. Treasury yield  US10YT=TWEB 
dropping almost 2 basis points to 1.591% before creeping back
above 1.6% and then dropping to 1.56%.
    "No trigger... it's a combination of a sell off on the
winners of the past months... with the month of May and a
'nervous' positioning," said Angelo Meda, portfolio manager at
Banor SIM in Milan.
    Some traders initially blamed the sharp moves on a report
that a Chinese military aircraft had entered Taiwan's air
defence zone, but they later discounted that as a factor as
similar occurrences have been quite common recently.
    The Taiwan defence ministry said, in a statement to
reporters in Taiwan that landed at 7.51 a.m. Eastern Standard
Time and a tweet https://twitter.com/MoNDefense/status/1389548626213494791
 timestamped 7.53 a.m., that a single Chinese anti-submarine
warfare aircraft flew into the southwestern corner of Taiwan's
air defence zone, in what is part of a routine pattern of
flights by China that Taiwan frequently complains about. 
    The fall in U.S. S&P stock futures started around 7:30am and
preceded that tweet.  
    "Everybody at the same point was looking for the switch that
was flipped at 7.30am," said Hogan, who called it a likely a
profit-taking move that started pre-market and extended after
the open.   
    "It doesn't take much to push investors over the side when
we're at or near all-time highs," said Hogan.  

 (Reporting by Thyagaraju Adinarayan in London, additional
reporting by Ben Blanchard in Taipei and Danilo Masoni in Milan
and Sinead Carew in New York; Editing by Dhara Ranasinghe, Megan
Davies and Catherine Evans)
 ((thyagaraju.adinarayan@tr.com; +44 (0) 20 7536 7471; Reuters
Messaging: thyagaraju.adinarayan.thomsonreuters.com@reuters.net;
Twitter @thyagu))

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