September Stocks Get Off to Scary Start as Fears Over China Persist


Global financial markets are set for a stormy September, after weak manufacturing data from China sparked a fresh worldwide sell-off.

Britain’s biggest companies were left nursing hefty losses, echoing those of last week’s “Black Monday”, as £48bn was yesterday wiped off their value.

The brief resurgence in global equities at the end of last week came to an abrupt halt after Chinese stocks fell in overnight trading, plunging at one point by as much as 5pc as fears of an economic slowdown gripped investors. The Shanghai Composite Index slumped by 1.3pc to close at 3,166.62.

Britain’s benchmark index was among the heaviest hit among its European peers. The mining-heavy FTSE 100 fell 189.40 points, or 3pc, to 6,058.54 – its worst one-day fall in over a week. The blue chip index has now fallen by 15pc since hitting a high of 7,104 in April.

European bourses also fell sharply, with the CAC in Paris and the German DAX both off by 2.4pc. US equities joined the sea of red, tumbling by more than 2pc, after the opening bell sounded on Wall Street.

China-led carnage resurfaced the world over after weak factory data reignited fears of a sharper slowdown in the world’s second-largest economy. China’s manufacturing sector contracted at its fastest pace in three years, an official survey showed. The Purchasing Managers’ Index fell to 49.7 in August, prompting immediate panic among investors, as a reading below 50 is considered a contraction.

Joshua Mahony, of IG, said: “Chinese markets have started the week just as the past three weeks have begun, with widespread selling and the expectation that the worst may not yet be over. There are precious few signs that China is beginning to recover and, while central bank action can provide a temporary reprieve, we are yet to see any evidence that it is doing any good to the economy.”

Laith Khalaf, of Hargreaves Lansdown, said “stock markets are once again feeling the Chinese burn”. Mr Khalaf pointed to the “usual suspects” which led the FTSE lower, including mining stocks, Burberry, and Standard Chartered, and which “rely heavily on China for their earnings”.

Elevated fears a slowdown in China will constrain global growth were little helped by data from the US manufacturing sector, which expanded at its slowest pace in more than two years. An industry survey revealed the US Purchasing Managers’ Index slipped to 51.1 in August – down from 52.7 a month earlier.

Click here to continue reading…

SOURCE: Tara Cunningham and Szu Ping Chan
The Telegraph

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s