An Indonesian talks his mobile phone inside a monitoring room at the Indonesia Stock Exchange in Jakarta, Indonesia, Tuesday.
EUROPE’S main stock markets have plummeted on fears that China’s economic woes would drag on global growth.
The roller coaster ride ended with the Dow Jones industrial average tumbling another 1.3%, losing 205 points, while the S&P 500 dropped 1.4% and the Nasdaq fell 0.4%.
Japan’s Nikkei fared more favorably, rising 3.2 percent as investors went on a bargain hunt following six days of falling shares.
China cut its interest rates for the fifth time in nine months in a renewed effort to shore up economic growth.
“However, taking a longer-term view shows that more negative is still possible”.
It followed on from a jarring finish on Wall Street where the S&P 500 slumped more than 3 percent in the last hour. Abengoa SA jumped 8.5 per cent after a report that 10 per cent of its capital increase will be in Class A shares, while the previous one was only with Class B shares. The yield on benchmark U.S. 10-year Treasuries eased to 2.0854 percent from 2.091 percent in late U.S. trade.
“What happened yesterday was purely panic”, said Peter Dixon, a global economist at Commerzbank AG in London.
“The Chinese economy is going to be on this bumpy road for a while, and it will have ebbs and flows that will no doubt have a serious impact on the global economy”, said Kamel Mellahi, professor at the Warwick Business School.
Beyond China, traders are waiting for clarity from the Federal Reserve, which has signaled it could begin raising its key interest rate from near zero for the first time in almost a decade as early as this year. The Fed isn’t expected to deliver a policy update until it wraps its next meeting of policymakers September 17.
The European stock markets also felt the “Asian financial quake” after opening Monday. The CAC 40 in Paris plunged 5.35 per cent to end the day at 4,383.46 points, after earlier shedding more than eight per cent. Frankfurt’s DAX 30 lost 4.70 per cent to finish at 9,648.43 points, its biggest percentage decline since November 2011.
The euro climbed to the strongest level since February against the dollar, reaching $1.15, while the Yen rose to a three-month high. Although it posted an 11% rise in first-half pre-tax profit as revenue grew and announced four acquisitions, analysts noted concerns over the group’s emerging markets businesses.
The benchmark Hang Seng Index lost 1,158.05 points to close at 21,251.57 – its lowest point since May 2014 – on a turnover of HK$138.97 billion (US$21.71 billion).
All big U.S. banks were higher, with Bank of America up 4.8 per cent at US$16.03. Russia’s ruble led a rebound in developing-nation as raw-material prices advanced from the lowest level since 1999.
Brent still stood not far from US$36.20, its low hit in the aftermath of the global financial crisis, having fallen more than 66 percent from last year’s peak.
Natural gas and heating oil prices also rose, and wholesale gasoline dropped.