Publications
Partners
Wellington - It’s a new month, and the same story. Stocks fell around the world and the yen gained with gold as the slowdown in China showed no sign of abating.
Asian shares started a global selloff after a gauge of Chinese manufacturing fell to a three-year low. European stocks followed after data pointed to weaker growth in the region, while Standard & Poor’s 500 Index futures signaled the slump will spread to the US.
READ: Asia stocks extend losses, Shanghai hit by more weak data
Treasuries climbed on haven demand while oil pulled back after a three-day rally sent it into a bull market. The yen strengthened the most among major currencies with its biggest gain versus the dollar in more than a week.
“We have renewed worries about the global economy,” Dirk Thiels, head of investment management at KBC Asset Management, said by phone from Brussels. “We are a bit worried. You can’t really call the bottom of the market at the moment.”
Hit by one of the most volatile trading periods since the financial crisis, $5.7trn was erased last month from the value of equities worldwide, and investors are now scanning data for signs of China’s impact on the global economy.
Factory gauges from France, Norway and Russia signaled contractions on Tuesday before data from the US that economists predict will show slower growth.
The MSCI All-Country World Index dropped 0.9% at 12:00 in New York, just after its worst month since 2012. S&P 500 E-mini futures expiring in September fell 2.2% after a record jump in volatility sent the gauge down 6.3% in August.
The Stoxx Europe 600 Index lost 2.5%, with the volume of shares changing hands about one-third greater than the 30-day average as the UK market reopened after a holiday. Miners dropped the most among industry groups as commodities resumed their slide.
Factory slowdown
The Shanghai Composite Index fell 1.2% and Hong Kong’s Hang Seng China Enterprises Index lost 3%.
The Chinese government’s manufacturing purchasing managers’ index dropped to 49.7 in August, its first time below 50 since February. The securities regulator said it will encourage listed companies to conduct mergers and acquisitions, buy back shares and pay higher cash dividends.
“The manufacturing index still shows that the economy is in the process of seeking a bottom,” said Wu Kan, a Shanghai-based fund manager at JK Life Insurance. “The market is unlikely to pick up anytime soon.”
The MSCI Emerging Markets Index lost 1.6% as benchmark equity gauges in India, Indonesia and Poland fell at least 1.9%.
In Turkey, shares in Koza Altin Isletmeleri AS and Koza Anadolu Metal Madencilik Isletmeleri AS tumbled more than 10%.
State media reported the country’s organized- crime police raided the Ankara headquarters of Koza Ipek Holding AS on Tuesday on accusations that the group, owner of Koza Altin, supports a “terrorist organization” led by US-based cleric Fethullah Gulen.
Oil fell after the biggest three-day rally in 25 years stalled before data forecast to show larger US crude stockpiles. West Texas Intermediate crude dropped 1.8% to $48.31 a barrel, while Brent slipped 2% to $53.09. Data Wednesday will show US crude stockpiles expanded, according to a survey of energy analysts.
Oil prices will remain stuck at $40 to $60 a barrel into 2016 as rising crude supplies overwhelm demand, according to Vitol Group BV, the world’s largest independent oil trader.
Copper lost 0.9% and nickel tumbled 2.4%. Gold rose 0.7% to $1 142.43 an ounce.
The yen appreciated 1.4% to ¥119.56/$, after a 2.2% gain in August, which was the biggest monthly advance since January 2014. The euro climbed 0.6% to $1.1281 as the Bloomberg Dollar Spot Index declined 0.3%.
Violent swings in currency markets last month proved a boon for foreign-exchange traders, which had their biggest gain since January, according to The Parker Global Strategies LLC index tracking currency-fund returns.
Treasuries rose, with 10-year note yields falling six basis points to 2.16%. Two-year yields fell for the first time in six days, dropping three basis points to 0.71%.
Government bonds in Europe also advanced, with Germany’s benchmark 10-year bund yield falling two basis points to 0.78%.
The cost of insuring corporate debt rose the most in a week. The Markit iTraxx Europe Index, which tracks credit- default swaps on investment-grade companies, climbed two basis points to 74 basis points. An index of non-investment grade CDS rose 14 basis points to 337 basis points.
