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New York - Stock markets across the world slid on Wednesday to six-week lows, with Wall Street on course for a sixth straight day of losses, as shrinking factory activity in China and Germany increased recession fears.
The JSE followed US markets lower and ended the day in the red. At the close the All Share [JSE:J203] index had declined 1.32% to 30 956.19 points.
Globally, commodity prices also fell, with copper hitting a one month-low and oil heading for its worst week since early October.
“It’s looking pretty ugly all round. The question is whether markets have fully priced that in,” said Nic Brown, an analyst at London’s Natixis.
“The Chinese economy is slowing and the authorities are waking up to that fact ... It’s now a question of whether they are prepared to ease monetary conditions as a result.”
Manufacturing in China shrank at its sharpest pace in 32 months in November, reviving fears of an abrupt slowdown for the world’s second-largest economy.
In Germany, Europe’s manufacturing heavyweight, factory activity contracted for a second straight month, and at a faster rate, as export demand slumped.
A “disastrous” German bond sale also sparked fears that Europe’s debt crisis was even starting to threaten Berlin, with the leaders of the euro zone’s two biggest economies still firmly at odds over a longer-term structural solution.
Investors were also unnerved by reports that Belgium is leaning on France to pay more into emergency support for failed lender Dexia under a 90-billion-euro ($120 billion) rescue deal that had appeared done and dusted.
A special report by Fitch Ratings suggested France had limited room left to absorb shocks to its finances like a new downturn in growth or support for banks without endangering its cherished AAA credit status.
Six-week low for stocks
World stocks, as measured by the MSCI All-Country World Index, tumbled 1.8% to their lowest level since October 10.
The global gauge was down for the eighth straight session, its longest losing run since late July and early August when the debt crisis, which began in Greece two years ago, spread to Italy. The index has lost more than 13% this year.
Europe’s FTSEurofirst 300 was down 0.7%.
In the commodity markets, Brent crude oil fell 1.5% or around $1.60, to $107.42 per barrel. Copper futures on the London Metal Exchange were off 1.7% at $7 206 a tonne
The dollar climbed to a six-week peak against the euro and hit session highs against the yen as investors continued to shun risk and seek safety in the currency of the world’s largest economy.
US Treasuries prices dipped after government data showed new US claims for unemployment benefits held below 400 000 for the third straight week, suggesting the labour market was gaining some traction.
The Dow Jones industrial average fell 1.47%, Standard & Poor’s 500 Index slid 1.69% and the Nasdaq Composite Index dropped 1.89%.
On the eve of the Thanksgiving holiday in the United States, trading volume was likely to be low, amplifying turbulence, traders said.
“I think that after all the losses we’ve suffered, the market is oversold. But the fact that we’ve fallen so far so fast suggests there could still be further room to drop,” said Robert Pavlik, chief market strategist at Banyan Partners LLC in New York.
The JSE followed US markets lower and ended the day in the red. At the close the All Share [JSE:J203] index had declined 1.32% to 30 956.19 points.
Globally, commodity prices also fell, with copper hitting a one month-low and oil heading for its worst week since early October.
“It’s looking pretty ugly all round. The question is whether markets have fully priced that in,” said Nic Brown, an analyst at London’s Natixis.
“The Chinese economy is slowing and the authorities are waking up to that fact ... It’s now a question of whether they are prepared to ease monetary conditions as a result.”
Manufacturing in China shrank at its sharpest pace in 32 months in November, reviving fears of an abrupt slowdown for the world’s second-largest economy.
In Germany, Europe’s manufacturing heavyweight, factory activity contracted for a second straight month, and at a faster rate, as export demand slumped.
A “disastrous” German bond sale also sparked fears that Europe’s debt crisis was even starting to threaten Berlin, with the leaders of the euro zone’s two biggest economies still firmly at odds over a longer-term structural solution.
Investors were also unnerved by reports that Belgium is leaning on France to pay more into emergency support for failed lender Dexia under a 90-billion-euro ($120 billion) rescue deal that had appeared done and dusted.
A special report by Fitch Ratings suggested France had limited room left to absorb shocks to its finances like a new downturn in growth or support for banks without endangering its cherished AAA credit status.
Six-week low for stocks
World stocks, as measured by the MSCI All-Country World Index, tumbled 1.8% to their lowest level since October 10.
The global gauge was down for the eighth straight session, its longest losing run since late July and early August when the debt crisis, which began in Greece two years ago, spread to Italy. The index has lost more than 13% this year.
Europe’s FTSEurofirst 300 was down 0.7%.
In the commodity markets, Brent crude oil fell 1.5% or around $1.60, to $107.42 per barrel. Copper futures on the London Metal Exchange were off 1.7% at $7 206 a tonne
The dollar climbed to a six-week peak against the euro and hit session highs against the yen as investors continued to shun risk and seek safety in the currency of the world’s largest economy.
US Treasuries prices dipped after government data showed new US claims for unemployment benefits held below 400 000 for the third straight week, suggesting the labour market was gaining some traction.
The Dow Jones industrial average fell 1.47%, Standard & Poor’s 500 Index slid 1.69% and the Nasdaq Composite Index dropped 1.89%.
On the eve of the Thanksgiving holiday in the United States, trading volume was likely to be low, amplifying turbulence, traders said.
“I think that after all the losses we’ve suffered, the market is oversold. But the fact that we’ve fallen so far so fast suggests there could still be further room to drop,” said Robert Pavlik, chief market strategist at Banyan Partners LLC in New York.
