Global markets are hemorrhaging. How many more band-aids can be put on a wound that is somehow only delaying the death of the patient?
Britain’s leading share index fell to 6,286 points on Friday morning immediately after opening, a decline of 1.26%.
The drop mirrored stock markets across Asia-Pacific after they went into “panic mode” when further signs of a weakening Chinese economy compounded overnight losses on Wall Street and European bourses.
China’s factory sector shrank at its fastest pace in more than six years in August as domestic and export demand dwindled, a private survey showed, adding to worries that the world’s second-largest economy may be slowing sharply and sending financial markets into a tailspin.
China’s surprise devaluation of the yuan and heavy selling in its stock markets in recent weeks have sparked fears that it could be at risk of a hard landing, which would hammer world growth.
Markets in countries whose economic fortunes are closely linked to China’s growth tumbled. Japan’s Nikkei average dropped almost 3% to six-week lows on Friday while the Kopsi index in South Korea fell 1.92%.
Shares in Australia are having their worst month since the global financial crisis hit in October 2008. On Friday afternoon the benchmark ASX200 was down 1.4% at 5,214 points and is down 8.5% so far in August, according to broker Commsec.
The Australian dollar was also hammered, falling 0.45% and went as low as US72.85c. The Aussie, which is seen as a proxy for the Chinese economy, has fallen about 1% in the past week.
The Hang Seng stock index in Hong Kong was down 1.92% while the Shanghai Composite index was 4.2% lower.
Commodities also suffered. US crude hit fresh six-and-a-half year-lows near $40 a barrel as it headed for its eighth straight weekly decline, the longest weekly losing streak since 1986. Brent crude for October delivery was down 29c at $46.33.
“Global markets are in panic mode as the full scale of China’s slowdown becomes clearer,” said Angus Nicholson at IG Markets in Sydney.
Japan’s economics minister, Akira Amari, said on Friday that he expected China’s government to take steps to prevent its economic slowdown from becoming a global problem.
Full article: Global stocks in ‘panic mode’ as Chinese factory slump drags on markets (The Guardian)