Global shares sell-off gains force as European stocks plunge

The downdraft from China is rattling economies of its trade-reliant Asian neighbours and prompting many Western companies to reduce investments and look for ways to cut costs.

The weak global cues and a steep fall in Shanghai stocks, along with concerns over the Indian government’s stand on minimum alternate tax (MAT), shaved 1039.34 points, or almost 3.80 per cent, off a key equity index of the Bombay Stock Exchange (BSE) at noon on Monday.

“Today everyone seems to be selling off, and there’s panic, there’s no rational choice anymore, no rational reaction”, according to Michael Woischneck of Lampe Asset Management GmbH, who helps oversee 6.2 billion euros (S$9.99 billion).

All of the region’s national stock measures fell more than 2.4 percent except for Iceland.

Apple’s shares jumped 5.1 per cent to US$108.43, giving the biggest boost to the Nasdaq. Glencore Plc and BHP Billiton Ltd. tumbled more than 5 percent. Benchmark U.S. crude gained $1.24 to $39.48 per barrel in New York.

The dollar, which fell to a 7-month low against a basket of currencies on Monday, was up about 1 per cent. Russia’s rouble also hit a new 2015 low and stocks sank, battered by falling oil prices and the impact of sanctions over Ukraine.

The market bloodbath, one of the worst since the 2008 global financial crisis, has also stoked fears about the overall health of the world economy, which is witnessing a fragile and uneven recovery.

Investors had despaired at the lack of policy action from Beijing in response to recent data suggesting the downturn in the world’s second-largest economy was deepening. “We want to remain exposed to Europe’s domestic and regional growth plays”. “The risks are still high, and sentiment is still fragile”. Slightly strong rises were seen in Germany with the Dax index, and Paris on the Cac 40.

It has been a tough year for European markets.

Better-than-expected profits from shipping and oil group Moller Maersk and a positive earnings outlook from travel firm TUI sent shares in the two companies up around 6 percent.

The Confederation of British Industry forecast 2.6 percent growth this year, up from the prior estimate of 2.4 percent.

“I think markets massively misunderstood what happened in China“, Jefferies strategist Sean Darby said. “It’s just a case of whether you would want to rush in now or perhaps wait until it settles down a bit more”. Glencore plunged by 13.02 percent and Anglo American tumbled by 9.91 percent.

But the gains only made up some of the ground lost in Monday’s slump when the main indices all lost about 4%.