A private factory gauge unexpectedly fell to the lowest level in more than six years, data Friday showed. At the same time, policy makers also expressed concerns that given recent drops in commodity prices inflation is still too low to justify an interest rate increase.
Retail sales in the city declined for a fourth straight month in June amid reduced demand from Chinese tourists, a trend that may continue after the yuan’s biggest tumble since 1994 last week. The Nasdaq skidded 104 points, or 2.1 percent, to 4,773. “Uncertainty is creeping into markets, as well as the economies on both sides of the Pacific, with China driving the fear”, said Evan Lucas, a market strategist at IG.
In the eurozone, the CAC-40 in Paris sank 2.06 percent to end the day at 4,783.55 points, while Frankfurt’s DAX 30 dropped 2.34 percent to finish at 10,432.19 points.
CHINA FEAR: China’s main Shanghai stock index staged a sharp fall for a second day in a row. The slump threatens to undermine confidence in President Xi Jinping’s ability to manage the economy. A figure above 50 indicates growth, while anything below signals contraction.
Shanghai: China stocks closed down sharply on Friday, posting their worst weekly performance in over a month. “That is worrying for the global economy“.
Technology and consumer shares were the biggest decliners on the CSI 300 Index, which slumped 3.1%.
In Hong Kong, most sectors fell, amid concerns that money was flowing out of emerging markets amid the region’s currency turmoil and an anticipated US interest rate hike.
To counter the $4 trillion equity rout, the government has armed a state agency with more than $400 billion to bolster share prices, banned selling by major shareholders and told state-owned companies to buy stocks.
At the peak of the crash, 5 day average of realized volatility reached close to 10% for its benchmark stock index Shanghai Composite.
While many investors pick and choose stocks based on a company’s business outlook, there is an entirely different class of trader who relies on such technical indicators to make investment decisions.
But the sentiment in Hong Kong was hit by weak global markets.
China stocks witnessed wild swings on Wednesday following a 6 per cent plunge in the previous session, as experts warned that it wouldn’t be an easy return to good times for the market.
Glencore (LONDON:GLEN) said first-half earnings fell 29% from the same period a year earlier as sliding metal and oil prices weighed and said capital spending next year was expected to be lower than this year.
A fresh sell-off of Chinese shares prompted renewed jitters across global markets on Thursday. The Dow Jones index ended Wednesday trading down 0.9%.