Fears over global slowdown hammer US stocks for 2nd day

A lot of the FTSE is oil and gas and mining stocks and those are at the mercy of commodity prices, and there’s no knowing where they are going to end up’.

Analysts at Societe Generale said: “Be it via the crash on the equity market or the surprise FX regime change, China has sent shockwaves through global markets and raised numerous questions on the outlook”.

The broader FTSE 350 mining index also languished near its lowest level since 2009.

The London Metal Exchange’s three-month copper contract was down 1.8% at $5,029 a metric ton.

The pan-European FTSEurofirst 300 was down 1.6 percent at 1,453.62 by 0703 GMT, with every sector in negative territory. The AIM All-Share closed down 1.5% at 732.40.

Update: The FTSE 100 has plunged 2.8% to close at the lowest level of the year as fears over China’s slowing growth continue to weigh.

Adding to the downbeat string of economic data from China, the US manufacturing sector expanded at a slower rate in August.

Markit’s Composite Flash PMI, rose to 54.1 this month from July’s 53.9. On Friday, they got more bad news: A private survey showed another drop in manufacturing on the mainland. A figure below 50 indicates contraction. The Nasdaq skidded 133.21 points, or 2.7 percent, to 4,745. The Shanghai index shed almost 12% over the course of the week.

Even seemingly dovish comments in the minutes of the U.S. Fed’s July meeting, released Wednesday – suggesting that members “would need to see more evidence that economic growth was sufficiently strong and labor markets conditions had firmed enough” before pulling the trigger on a rate hike – failed to soothe markets, and that’s rarely a good sign.

“The Chinese have created an air of fragility around the globe”.

Markets were also contending with fresh political turmoil in Greece, where prime minister Alexis Tsipras resigned, triggering snap elections for September.

A leader who remains popular with the electorate, Tsipras had been widely expected to call polls in a bid to regain office with a stronger hand. It will be the third-largest bloc in parliament after Syriza, which then would have 124 members, and the conservative Greek opposition party Nea Dimokratia, with 76.

But the prospect of a minority government, of either the hard Left or Greece’s pro-euro centre-right forces, is unlikely.

The new Greek elections are due only weeks before monitors acting on behalf of Athens’ creditors launch a review of the nation’s progress in implementing the reforms that form part of its bailout. “In an expensive market that was one more piece of bad news investors weren’t willing to look through”, he said.

Last week’s shock two per cent devaluation in the yuan and a slump in Chinese shares over the summer have unnerved investors further. The cut to the revenue guidance means the group now expects its revenue and earnings before interest, taxation, depreciation and amortisation growth to be 4% to 6% for the full year.