MSCI’s emerging markets index was at its weakest in four years, off 2.16%, while the firm’s all-country world stock index fell 2.7%.
A big sell-off in New York saw the Dow Jones Industrial Average tumble more than 300 points, or 2%, amid Wall Street’s worst performance in 18 months on Thursday.
The pan-regional FTSEurofirst fell 3.4 percent to 1,427.13, its worst day since November 2011, as traders shrugged off euro zone manufacturing and services data in a third straight day of selling.
A global market rout intensified Friday, pummelling stocks and commodities, as concerns about China’s economy pushed the Dow industrials into correction territory. On Friday, they got more bad news: A private survey showed another drop in manufacturing on the mainland. The benchmark U.S. crude fell 95 cents to $40.37 per barrel on the New York Mercantile Exchange.
“Global markets are in panic mode as the full scale of China’s slowdown becomes clearer”, Angus Nicholson, market analyst at IG Index, said.
No. In fact, the Standard & Poor’s 500 index, considered a far broader gauge of the U.S. stock market’s health, is down 7.5 percent from its most-recent high.
“The flawless storm that has enveloped EM local markets looks set to continue”, Barclays analysts said in a note.
Some believe it could be an opportunity for some investors to pick up cheap stocks in order to make a profit in the months ahead. The S&P 500 dropped about 3.2 per cent to 1970.89.
Among other key markets, Singapore and Sydney dropped 1.3 percent; Johannesburg 1.47 percent, and Brazil s Ibovespa 1.99 percent. Worries about the world economy had already been intensifying after China devalued its currency last week, compounded by uncertainty about what Federal Reserve inflation concerns portend for interest rates in the United States.
“It’s very clear that global growth is being questioned, and that China is front and center”, Jim Russell, principal and portfolio manager at Bahl and Gaynor, told CBS MoneyWatch.
In addition, China’s stock markets have fallen more than 30 percent since mid-year despite the fact the government suspended trading to stop the slide.
The fall in oil prices is hurting U.S. energy stocks too.
In Asia, the Shanghai Composite index suffered another steep drop of 4.3 percent. It has now been in decline for eight consecutive weeks, the longest streak since 1986.
Next week, investors will focus on housing data, which has been strong of late, and the preliminary reading of second-quarter GDP, which could lead investors back towards riskier assets if they point to an improving U.S. economy.
“But for most long-term investors, fears of a near-term financial apocalypse are overdone”. The US benchmark settled down 2.1 per cent at $US40.45 a barrel.
Declining issues outnumbered advancing ones on the NYSE by 2,391 to 671, for a 3.56-to-1 ratio on the downside; on the Nasdaq, 1,682 issues fell and 1,119 advanced for a 1.50-to-1 ratio favoring decliners.