Stock market endures worst day in 18 months

Equities continued to slide across the globe Friday after China released its weakest manufacturing data since the global financial crisis, which accelerated losses in riskier assets.

World stock markets have suffered their worst week of the year so far as concerns about the health of the Chinese economy rattle investors across the globe. “Investors are scared and confused, and if you are an emerging market equity investor, probably close to suicidal”.

Strategists and traders, noting the lack of major U.S. economic news on Thursday, said the drop in stocks was also likely tied to programmed selling, which came after the S&P 500 moved below one of its most closely watched indicators, a 200-day moving average.

Bank of America, JPMorgan and Citigroup weighed the most on the index and were down between 1.5-2 percent.

Hong Kong is now down more than 20 percent from its April peak, taking it into a bear market by some definitions of the term.

Money into these stocks backed by the “national team” – institutions enlisted by the government to support the market – are speculative in nature, according to Gui Haoming, analyst at Shenwan Hongyuan Securities.

This, as you can imagine, is a big deal.

This week, investors appear to have finally decided on their course, wiping out the year’s gains amid a broad selloff that pushed the markets into negative territory – and to their lowest point since February. It said it expects the weak agriculture and energy sectors to continue dragging down equipment sales.

The S&P 500 was down 65 on Friday or more than 3.18% and for the week dropped over 4.5%. Even with a late rush of buying, the index closed down more than 11% for the week.

In China, a preliminary version of a gauge of business activity, the Caixin purchasing managers’ index, fell to an unexpectedly low 47.1 points. Numbers below 50 show a contraction.

Blue-chip shares fell further today as renewed fears over China saw the London market extend its run of declines.

How bad is China’s economic slowdown?

The US oil benchmark West Texas intermediate dropped 4.3% to settle at 40.80 a barrel on the New York Mercantile Exchange after the U.S. Energy Administration reported an increase in crude oil stockpiles from last week.

‘It’s been a frightful fortnight for the Footsie, which has seen its losing streak stretch to nine consecutive days, ‘ said Laith Khalaf. Most traders believe the Fed will either raise interest rates in September or wait until early 2016.

Although the US unemployment rate has been falling, inflation remains well below the Fed’s two per cent target.

Beijing reacted forcefully. The central bank cut interest rates to a record low, regulators suspended new market listings, and threatened to throw short sellers in jail.

“The fact UK stocks fell so steeply on Wednesday despite Germany signing off on the Greek bailout underlines how peripheral this issue has now become, and how quickly the market can switch its focus”.