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Global stock markets hit by weak Chinese data | Global stock markets hit by weak Chinese data |
(35 minutes later) | |
Renewed fears over growth in China have hit global stock markets, with the main indexes falling sharply. | Renewed fears over growth in China have hit global stock markets, with the main indexes falling sharply. |
Wall Street traded sharply lower, with the Dow Jones down more than 300 points, or 1.9%, at 16,215. | Wall Street traded sharply lower, with the Dow Jones down more than 300 points, or 1.9%, at 16,215. |
European markets also fell, with the UK's FTSE 100 closing down 3% and France's Cac 40 and Germany's Dax about 2.4% lower. | European markets also fell, with the UK's FTSE 100 closing down 3% and France's Cac 40 and Germany's Dax about 2.4% lower. |
Earlier, figures for August showed factory activity in China contracting at its fastest pace in three years. | Earlier, figures for August showed factory activity in China contracting at its fastest pace in three years. |
The official manufacturing purchasing managers' index (PMI) dropped to 49.7 from 50 in July. A figure below 50 indicates contraction. | The official manufacturing purchasing managers' index (PMI) dropped to 49.7 from 50 in July. A figure below 50 indicates contraction. |
It follows recent turmoil in the markets sparked by concerns over a slowdown in the world's second-largest economy. | It follows recent turmoil in the markets sparked by concerns over a slowdown in the world's second-largest economy. |
"The importance of today's announcement is that the slowdown is hitting the larger state-backed firms who typically take longer to feel the pain," said Josh Mahony from online trading firm IG Index. | "The importance of today's announcement is that the slowdown is hitting the larger state-backed firms who typically take longer to feel the pain," said Josh Mahony from online trading firm IG Index. |
"There are precious few signs that China is beginning to recover, and while [the People's Bank of China's] action can provide a temporary reprieve, we are yet to see any evidence that it is doing any good to the economy," he added. | "There are precious few signs that China is beginning to recover, and while [the People's Bank of China's] action can provide a temporary reprieve, we are yet to see any evidence that it is doing any good to the economy," he added. |
August losses | August losses |
Energy companies led the way down on the Dow, with Chevron and Exxon Mobil down about 3%. This followed a fall in the oil price, which was down more than 4% at $51.89. | Energy companies led the way down on the Dow, with Chevron and Exxon Mobil down about 3%. This followed a fall in the oil price, which was down more than 4% at $51.89. |
Before Tuesday's fall, the price of oil had risen by about 25% in the past three trading sessions. | Before Tuesday's fall, the price of oil had risen by about 25% in the past three trading sessions. |
The S&P 500 was also down about 2% at 1,934.18, while the tech-heavy Nasdaq was 1.6% lower at 4,699.21. | The S&P 500 was also down about 2% at 1,934.18, while the tech-heavy Nasdaq was 1.6% lower at 4,699.21. |
Global markets sustained heavy losses in August - for both the UK's FTSE 100 and the US's S&P 500, it was the worst month since May 2012. | |
As well as the poor China factory data, investors are unsure about the US central bank's next move. Many had pencilled in the a rate rise - the first move since the financial crisis - for September. However, given the recent stock turmoil, analysts seem less certain. | |
"The volatility is here to stay for a while, or at least till the Fed gives us an indication regarding a rate increase," said Art Hogan, chief market strategist at Wunderlich Securities in New York. | |
"Right now, they are being quite cagey." |