The Australian and New Zealand dollars fell by 0.6% and 0.3% respectively against their United States counterpart, and even more against the Japanese yen and euro.
The Standard & Poor’s 500 index slipped 49.57 points, or 2.6 percent, to 1,881.77.
China’s blue-chip CSI300 index.CSI300 and the Shanghai Composite Index.SSEC were down 2 per cent and 1.9 percent respectively in afternoon trading.
Every industry category on the main section lost ground, with decliners led by shipping, iron and steel and pharmaceutical issues.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies outside of Japan, has dropped 4.2% in its worst performance since the 1997-98 crisis.
The latest panic comes after China said its key industrial companies saw profits fall 8.8 percent in August – hit by last month’s shock devaluation, weak demand and plunging stocks. Pharmaceutical stocks in the USA are limping after a price-gouging incident raised the prospect of greater regulation. Asia’s worst performing currency, Malaysia’s ringgit, lost as much as 14% of its value this quarter and is down 26% for the year, while Thailand’s baht has weakened close to a five-year low, with its worst quarterly performance since 2000.
On Friday the Commerce Department said the U.S. economy grew 3.9 per cent in April-June, up from the 3.7 per cent originally stated thanks to a boost in investment and consumer spending.
The Nikkei average extended losses in the afternoon to over 740 points due to heavy selling by foreign investors amid heightened risk-averse sentiment, brokers said.
Commodities and the global financial markets still face a major test of nerves on Thursday, when the closely watched Chinese purchasing managers index (PMI) is likely to show the country’s factory sector shrank for the second consecutive month in September.
ANALYST TAKE: “At the risk of saying ‘It’s that time of year, ‘ bearing in mind the timing of historical equity market crashes in September or October, there is no doubt that a confluence of events is unsettling investors”, said Neil MacKinnon, global macro strategist at VTB Capital.
ENERGY: Benchmark USA crude was down 94 cents to $44.76 a barrel on the New York Mercantile Exchange. The fallout from Volkswagen’s emissions rigging scandal is spreading to other auto brands.
Investors drew a few relief as mining and trading giant Glencore recovered 16.9 percent overnight having falen to a record low at the start of the week on concerns over the company’s ability to withstand a prolonged decline in metals prices.
On forex markets a few confidence returned to trading floors as safe-haven assets retreated, with the dollar slipping 1.4 percent against the South Korean won and 0.3 percent against the Indian rupee.
– Heating oil fell 4.5 cents to close at $1.477 a gallon.
The aussie edged up to 84.21 against the yen and 1.6029 against the euro from yesterday’s closing quotes of 83.60 and 1.6097, respectively.