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US equity futures tumbled and stocks slumped across Europe and Asia after evidence of slowing Chinese growth dashed investor hopes for an upbeat start to 2019. Safe havens including gold, bonds and the yen all rallied.
Contracts on the S&P 500 Index at one point dropped more than 2%, while those on the Nasdaq plunged as much as 2.8%.
The Stoxx Europe 600 Index fell for the first time in three trading sessions as every sector retreated. Earlier declines spread from Hong Kong to Sydney after a closely watched Chinese manufacturing gauge showed factory conditions slumping in December amid ongoing trade tensions with America. US futures had started the day higher on signs President Donald Trump may be willing to make a deal to end a government shut down.
The disappointing data out of the world’s second-biggest economy appears to have torpedoed optimism on the first full day of trading in 2019. While Trump made positive noises about reaching a trade deal with his counterpart Xi Jinping over the weekend, the Chinese data - and similar readings from across Asia - are a stark example to investors that the protectionist showdown is starting to have an impact on economic activity.
“The trend remains lower for now,” Kyle Rodda, an analyst at IG Group Holdings, told Bloomberg Television. “We’ve had rate hikes from the Fed effectively priced out, so we are looking at a situation when markets are thinking that we are entering a period of slower growth.”
Elsewhere, West Texas crude dropped below $45 per barrel and gold headed for a six-month high. Emerging-market equities slumped.
The FTSE/JSE All Share was down over 3% by 11:00, and the JSE Top-40 down 3.6%. Every stock in the Top 40 fell, with Anglo American down 4.5%, Naspers down 5% and Old Mutual down 4.2%.
