On 31 August, 2015 – Most European markets slid on renewed concerns over China

Stocks end August on a down note.
United States
Stocks ended the day and the month of August lower as China tested investors’ nerves. US stocks had their worst monthly performance since May 2012 with the Dow Jones industrials ending 6.6% lower and the S&P down 6.3%. Nasdaq slid 6.9% also its largest decline since May 2012. For the day Monday, the Dow, S&P and Nasdaq were down 0.7%, 0.8% and 1.1% respectively. Stocks fell broadly in Monday trading, with the exception of energy shares, which reversed an early slump after the price of crude oil surged.
Stocks trimmed their losses in the late morning after energy shares rallied. The move followed a jump in oil prices after a government report reduced its crude production estimates and OPEC said it is ready to talk to other global producers to achieve “fair prices.” Strategists expect the volatility in the stock and commodities markets to remain for some time. With the Federal Reserve’s interest rate decision more than two weeks away and corporate earnings six weeks away, jumpy investors will have little in the way of fundamentals to build a reason to buy.
Fed Vice Chairman Stanley Fischer said over the weekend that policymakers still had a “pretty strong case” for raising rates in September. That ran counter to recent market sentiment that China’s economic slowdown and global market volatility might prompt the nation’s central bank to wait. Speaking at the Fed’s annual gathering in Jackson Hole, Wyoming, Fischer emphasized he was not saying what action the Fed might take at its September meeting, but analysts took his comments to mean he saw the economy moving close to satisfying the Fed’s conditions for a increase in its fed funds policy interest rate.
Gold London fixing was closed for a holiday. The US dollar was down against the euro, yen the Canadian dollar. However, it advanced against the pound, Swiss franc and the Australian dollar. The Dollar Index was up 0.15%. The yield on US Treasury 30 year bond was up 4 basis points to 2.95% while the yield on the 10 year note added 3 basis points to 2.21%. Copper futures were down 0.4% to US$2.34. WTI spot crude was up US$3.40 to US$48.62. Dated Brent spot crude was up US$3.34 to US$53.39. Oil futures soared on Monday for a third consecutive day as a downward revision of US crude production data and OPEC’s readiness to talk with other producers helped extend the surge in prices.
Europe
Most European markets were down Monday as renewed concerns over China weighed on investor sentiment. Concerns over the upcoming snap elections in Greece and the likelihood of a near-term US interest rate increase also contributed to the negative mood at the start of the new trading week. The CAC was down 0.5% and the DAX lost 0.4%. The SMI however, added 0.4%. The FTSE was closed for a bank holiday.
The Financial Times reported that the Chinese government has decided to abandon attempts to boost the stock market through large-scale share purchases. Senior regulatory officials told the Financial Times China’s leaders feel they mishandled their efforts to rescue the stock market. The Chinese government resumed large scale stock buying late in the trading day last Thursday to help the Shanghai Composite finish sharply higher, but officials said the government will refrain from further large scale buying of shares.
Volkswagen was down after Japan’s Suzuki Motor said that it would buy back the 19.9% stake it sold to the German automaker after an international court settled a dispute between the automakers over their soured partnership. BMW and Daimler along with Renault and Peugeot retreated. Insurer Allianz advanced on a report that its infrastructure arm is weighing bids for London City Airport. RWE and E.ON dropped. Both Total and Technip tumbled. Eni SpA climbed after the company announced over the weekend that it made a massive natural gas discovery off the coast of Egypt.
Eurozone harmonized index of consumer prices edged up 0.2% in August for a third month. Germany’s retail sales rebounded in July to grow at the fastest pace in nine months. Retail sales advanced 1.4% on a monthly basis in July — the fastest growth since October 2014, when sales climbed 1.8%.
Asia Pacific
Asian stocks were mixed as concerns that the US could raise rates at its September FOMC meeting and continuing volatility in Chinese equities kept investors nervous. However, the markets across the region pared early losses as Chinese stocks recovered much of their early losses.
The Shanghai Composite lost 0.8% amid concerns that the government is reducing its controversial market intervention. Caution ahead of PMI data due to be released during the Tuesday global day and some profit taking after two days of gains also weighed on the market which is heading into a holiday weekend. Markets in Shanghai and Shenzhen will be shut on Thursday and Friday to celebrate the 70th anniversary of the end of World War II. The Hang Seng was up 0.3% in the wake of supportive comments from Chinese Premier Li Keqiang over the weekend. Li said that China is growing at a reasonable pace and the government can handle the risks the country faces. Separately, in a significant development, the National People’s Congress (NPC) Standing Committee has introduced a debt ceiling for local government debt in an effort to boost investor confidence in the economy and markets.
The Nikkei dropped 1.3% after data showed the country’s industrial output unexpectedly fell in July by 0.6% amid global uncertainty. Housing starts growth also slowed more than expected in July, strengthening the case for fiscal stimulus. Canon and Sharp retreated as the yen strengthened. Advantest tumbled after the stock was excluded from the MSCI Japan Index. Honda Motor, Mazda and Toyota retreated after industry figures showed automobile production in Japan declined for the 13th consecutive month in July. Fast Retailing, Fanuc and Softbank declined.
The S&P/ASX was down 1.1% while the All Ordinaries lost 1.0%. The four big banks declined along with miners BHP Billiton and Rio Tinto. The Kospi added 0.2% after erasing earlier losses. The Sensex declined 0.4% thanks to expectations of a near term increase in US interest rates and news of a new round of elections in Greece kept investors nervous. The market was also wary ahead of second quarter growth data which was due after markets here closed. Second quarter GDP was up 7.0% on the year after growing 7.5% in the first quarter.
Global Stock Market Recap

Please remember, the value of investments and the income from them can do down as well as up. Funds that invest in overseas markets may be subject to currency fluctuations. Investments in small and emerging markets can be more volatile than other overseas markets. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only.
Looking forward*
August CFLP manufacturing PMI will be posted. August manufacturing PMIs will be reported for China, Japan, India, France, Germany, the Eurozone and the US. The Reserve Bank of Australia announces its monetary policy decision. Germany and the Eurozone release unemployment for August and July respectively. Italy posts revised second quarter GDP. Canada reports second quarter GDP and June monthly GDP. In the US, August ISM manufacturing survey and July construction spending also will be released.
*Note — all releases are listed in local time.