World stocks shudder as economy jitters take center stage
Stocks shuddered again Thursday, led by a sharp drop in Hong Kong as it caught up with global market turmoil after Lunar New Year holidays. An escalation in tensions between North and South Korea added to a litany of woes for markets that were already flustered by signs of slowing global growth and the slide in oil prices.
France's CAC 40 slid 3.5 percent to 3,920.77 and Germany's DAX dropped 2.7 percent to 8,774.59. Britain's FTSE 100 shed 2.3 percent to 5,541.02. Futures augured sharp losses on Wall Street. Dow futures sank 1.6 percent to 15,617.00 and S&P 500 futures fell 1.6 percent to 1,817.00. The dollar lost 1.8 percent against the Japanese yen.
"What started in January as mainly China based worries has clearly broadened back out to concerns about global growth," said Shane Oliver, chief economist at AMP Capital in Sydney. He said five fault lines are driving concerns about the global economy: the malaise in emerging markets, the ongoing concerns about waning growth China, the collapse in oil prices, the strong dollar and fears that the global economy could plunge into a recession because of financial market turmoil. North Korea on Thursday vowed to immediately deport all South Korean nationals and freeze all South Korean assets at a jointly run factory park in the North, an aggressive response to the South Korean decision to suspend operations at the complex in response to the North's missile and nuclear tests. The Korean peninsula is a potential flashpoint for the U.S. and China. Washington is an ally of South Korea and Beijing is the main backer of North Korea.
Hong Kong's Hang Seng dived 3.9 percent to 18,545.80 after opening as much as 5 percent lower. South Korea's Kospi staged its biggest daily drop in nearly four years, down 2.9 percent to finish at 1,861.54. The Hong Kong and South Korean markets opened for the first time this week after Lunar New Year holidays. China and Taiwan will reopen on Monday. Japan was closed Thursday for a separate public holiday. Australia's S&P/ASX 200 was up 1 percent to 4,821.10. Singapore, Thailand, India and New Zealand fell while benchmarks in the Philippines and Indonesia rose. Federal Reserve Chair Janet Yellen offered no major surprises in prepared remarks released before the start of her two-day Congressional testimony.