“But there doesn’t seem to be any signal that the weakness overseas is slipping into the U.S. economy“, he said.
Among other key markets, Singapore and Sydney dropped 1.3 percent; Johannesburg 1.47 percent, and Brazil’s Ibovespa 1.99 percent. Now, the question is whether the world can stay on the recovery path without the Fed’s largess.
Britain’s leading share index had fallen 1.5% to 6,272 by Friday afternoon, with Wall Street opening lower as the Dow Jones industrial average fell 123.13 points, or 0.72%, to 16,867.56. The S&P 500 suffered its biggest daily percentage drop in almost four years on Friday, losing 64.8 points, or 3.19 percent. At the sixth anniversary of the bull market in March, the Standard and Poor’s 500 index had more than tripled in value. The Nasdaq is precariously near being in a correction, down 9.eight % from its most-recent excessive, however that isn’t by definition a correction. The dollar fell 1.1 percent lower at 122.03 yen. The Nasdaq Composite, which had registered the strongest gains of the year, shed 171.45 points at 4,706.04, about 30 points below where it had ended in 2014.
Athens’ main stocks index on Friday sank 2.49% to close at 635.31 points. A barrel of U.S. crude oil fell below $40 per barrel for the first time since the end of the global economic crisis.
US oil prices were in the range due to global oversupply as well as worries over China.
Less demand for oil hurts these country’s economies, which rely on China as a trade partner.
“Sharp falls in global equities, particularly US shares, further contributed to worries that global growth would be sluggish”.
The S&P slumped 5.8% for the week, its biggest weekly percentage decline since September 2011.
Investors will get another clue on the economy on Thursday when the government releases its estimate of economic growth in the April-June period. The yield of the 10-year U.S. Treasury note fell to 2.05 percent Friday from 2.07 percent Thursday.
For all the markets’ jitters, many economists say they remain confident that the U.S. economy is resilient enough to withstand a slowdown in the developing world.
The Fed was expected, perhaps at its September meeting, to raise the short-term rate it controls from near zero.
The uncertainty with the central bank makes the markets uneasy.
The stock market’s steep decline this week has pushed the Dow Jones industrial average into what is known as “correction” territory. The falls play into the arguments of more bearish analysts, who have been warning for months that investors were not sufficiently taking into accounts the risks facing the worldwide economy. Numbers below 50 show a contraction. Aside from China, Russia, Vietnam, and Kazakhstan have also seen their currencies devalued.
Traders have been anxious about slowing growth in China and its potential impact on the U.S.
Preliminary August consumer price readings for Germany and Spain on Friday will provide further insight into how effective the European Central Bank’s bond-buying efforts have been at warding off deflation. On Wednesday, it announced about $17 billion in new six-month loans to 14 unnamed financial institutions.
There is direct concern, of course, for companies selling into emerging markets such as China, particularly if the renminbi devaluation continues.
Telstra had also dropped by more than one per cent. The Nikkei 225 in Tokyo closed down 3 percent.