Stocks slide on fears about global economy
INTERVENTION BY CHINA TO STEADY MARKETS FAILS TO STEM LOSSES
World stocks fell again yesterday after their worst first-day performance in years, extending losses as relief at intervention by China to steady its markets quickly evaporated in the face of mounting concerns about the global economy.
European stocks moved back into the red after opening up as much as 1 per cent, and US futures pointed to a fall of 0.6 per cent on Wall Street.
Despite a cash injection of around $20 billion, Chinese shares listed in Shanghai and Shenzen ended no better than little changed yesterday and the yuan fell to a new 4-1/2year low in offshore trade.
Sanjiv Shah, chief investment officer at Sun Global Investments, said Beijing’s latest attempts to steady its equity and currency markets reflected the depth of the concerns.
“The Chinese government is trying to manage the market moves and reduce volatility. However, the trend of slowing growth as manufacturing continues to perform poorly is clearly worrying/straders,” Shah said.
Panic selling, mostly by China’s army of small retail investors, sent the country’s shares diving 7 per cent on Monday, the first trading day of 2016, That set off a worldwide reaction, pushing MSCI’s global index 2 per cent lower. The global index recovered early yesterday, but by mid-session in Europe was back down 0.2 per cent. The FTSE pan-European index of 300 leading shares was also down 0.2 per cent at 1,398 points, extending Monday’s 2.5 per cent fall.
German and French stocks were down 0.6 per cent after opening around 1 per cent higher while Britain’s FTSE 100 index was down 0.1 per cent.
Emerging equities, having posted their biggest one-day fall since August, stayed close to those lows. Monday marked the worst opening day of a year for stocks in many years.
In the case of the S&P 500 it was since 2001 and the Dow Jones Industrials at one stage was on track for its biggest opening day fall since 1932 before clawing back.
Many analysts predicted that investors would view any bounce as a chance to sell, given the economic gloom, weak commodity prices and the escalation of political risk.