On 01 September, 2015 – Global markets fell on concerns over China

September got off to a dismal start. Stocks tumbled globally after Chinese manufacturing data disappointed yet again.
United States
Stocks here joined a global sellof after shares experienced their worst month in more than three years amid continuing concerns that China’s slowdown will weigh on the global economy. The Dow Jones industrials dropped 2.8%, the S&P lost 3.0% and the Nasdaq was 2.9% lower on the day.
Energy shares fell for the first time in five sessions as oil tumbled after the commodity’s strongest three day rally since 1990. Exxon Mobil and ConocoPhillips slumped. Banks were also among the hardest hit, with Citigroup, Bank of America and JPMorgan Chase retreating. Copper producer Freeport-McMoRan sank to lead a decline in raw-materials. Facebook, Amazon.com, Apple, Netflix and Google — which had come to be known as the Fab Five — were all down. Among other technology stocks, Microsoft and Skyworks Solutions tumbled.
International Monetary Fund Managing Director Christine Lagarde said Tuesday the global expansion outlook is worse than the lender anticipated less than two months ago. She said that it reflects two forces — a weaker than expected recovery in advanced economies and a further slowdown in emerging economies, especially in Latin America.
Both the August ISM manufacturing index and the Markit manufacturing PMI indicated slower growth thanks to anemic demand from emerging markets such as China which translated into leaner factory order books. The weak manufacturing data surface ahead of the Federal Reserve’s September policy meeting in which they will debate whether the economy is strong enough to withstand an increase in interest rates in the face of fragile overseas economies.
Gold at the afternoon London fixing was up US$7.30 to US$1,142.30. Copper futures were down 2.1% to US$2.29. WTI spot crude was down US$4.29 to US$44.91. Dated Brent spot crude was down US$5.07 to US$49.08. The US dollar was up against the pound and the Canadian and Australian dollars. However, it declined against the yen, euro and the Swiss franc. The Dollar Index was down 0.7%. The yield on US Treasury 30 year bond was down 3 basis points to 2.92% while the yield on the 10 year note declined 5 basis points to 2.16%.
Europe
Stocks dropped Tuesday as concerns over China worsened. Weak Chinese manufacturing data weighed on shares of mining and luxury goods companies. European financial and insurance stocks were also under pressure, with investors in a very negative mood. The weak opening of the US markets and the unexpected drop in US manufacturing data also contributed to the sell-off. The FTSE dropped 3.0%, the SMI declined 2.3% and both the CAC and DAX lost 2.4%.
Banks including Deutsche Bank, Commerzbank, Société Générale, BNP Paribas and Crédit Agricole dropped. Car makers including Volkswagen, BMW, Daimler, Renault and Peugeot tumbled. Bayer and Merck were lower. In London, mining stocks were under pressure due to the weak Chinese manufacturing data. Glencore, Anglo American, BHP Billiton, Antofagasta and Rio Tinto declined. Man Group dropped after a report said China took into custody the company’s country unit head to assist an investigation into market volatility. Aga Rangemaster surged after it received an approach regarding a possible cash offer from Whirlpool.
Eurozone July unemployment rate unexpectedly dropped to 10.9 after holding steady at 11.1% in the two prior months — its lowest level in three-and-a-half years, adding to hopes that consumer spending will support growth amid low inflation. Germany’s August unemployment rate was unchanged at 4.7%. Eurozone August manufacturing PMI slipped to 52.3 from 52.4 in July. The UK PMI declined to 51.5 from 51.9 in July.
Asia Pacific
Asian stocks dropped Tuesday after surveys portrayed a further loss of momentum in China. Weak capex data out of Japan and sluggishness in South Korea’s exports also sent investors fleeing riskier assets in search of safe haven assets such as the Japanese yen and gold.
The Shanghai Composite declined 1.2% (it was down as much as 5% in early trading) as weak manufacturing and services sector data added to concerns about the slowdown in activity. August manufacturing PMI contracted at a faster rate as it hit a six-year low of 47.3, down sharply from 47.8 in July but higher than the flash estimate of 47.1%. Caixin’s services PMI sank to 51.5 from 53.8 in July while its composite index fell to 48.8 from 50.2. China’s official PMI, released earlier in the day, slipped to a three-year low of 49.7 in August, down from 50.0 in the previous month. The Hang Seng was down 2.2% on the day. Investors largely ignored fresh support measures announced by the government, including relaxation in housing investment rules for the second time in two weeks and policies to support mergers and acquisitions involving listed firms. The Chinese markets will be closed on Thursday and Friday to celebrate the 70th anniversary of the end of World War II.
The Nikkei retreated 3.8% after Monday’s decline in US shares, the deteriorating outlook for China, slowing growth in corporate capital expenditure and a stronger yen rattled investors. Export oriented shares were hard hit with Canon, Sharp, Panasonic, Sony, Honda Motor and Mazda Motor sliding. Also declining were Fast Retailing, Fanuc and Softbank. Toshiba plummeted after the industrial group said it had discovered new accounting irregularities including at a US unit.
Australian shares fell sharply to hit their lowest level in a week as the Reserve Bank of Australia kept its cash rate unchanged at a record low of 2.0% for the fourth straight meeting. The S&P/ASX lost 2.1% while the All Ordinaries were 2.0% lower. Banks and miners retreated.
Seoul sharers dropped even as dismal exports and tepid inflation data bolstered expectations that the central bank will cut rates soon. The Kospi was down 1.4% as the manufacturing PMI continued to contract with a reading of 47.9, up from 47.6 in July. The Sensex tumbled 2.2% following the selling across Asia and Europe.
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*
Australia releases second quarter GDP. Germany reports July retail sales. The Eurozone releases July producer price index. In the US, August ADP private employment, July factory orders and second quarter productivity & costs will be released. The Federal Reserve publishes its Beige Book in preparation for the FOMC meeting on September 16 and 17.
*Note — all releases are listed in local time.