U.S. stocks were poised for a slightly lower open Friday, rounding out a week marked by fears about a cooling Chinese economy. Worries over slowing growth in the world’s second-largest economy has triggered selloffs in global markets.
EUROPE DOWN: In Europe, France’s CAC-40 declined 3.2 percent while Germany’s DAX fell 2.9 percent. Wall Street was mixed, with futures for the Dow Jones industrial average down 0.1 percent and the Standard & Poor’s 500 index up by a similar margin.
More than $500 billion was erased Thursday as investors targeted the year’s biggest winners such as Netflix. The Nasdaq Composite shed 3.5 per cent to 4706.04. Now eight of the 10 sectors are negative for the year.
The market turmoil has some traders exercising caution. “Nimble…is the new black”.
Oil’s run of weekly losses is its worst since 1986, when the Organisation of the Petroleum Exporting Countries ramped up production and sent it as low as $10 a barrel. The Russell 2000 entered correction territory.
Earlier, the Shanghai Composite Index tumbled 4.3 per cent, hitting its lowest level since March, despite Beijing’s efforts to prop up the market in recent weeks.
Seoul fell 2.01 percent, or 38.48 points, to 1,876.07 as tensions climbed with North Korea, and Sydney dropped 1.40 percent, or 73.98 points, to close at 5,214.60. The blue-chip average is now at its lowest level since October 2014. Bond prices and yields move inversely.
In the FX markets, the euro regained some of its overnight momentum having been pushed to a two-month high by those looking to get out of battered Asian currencies and China proxies such as the Aussie and Hong Kong dollars.
Many investors anticipate the U.S. central bank to begin to raise interest rates by the end of the year, although expectations for a September hike were tempered by the minutes from the Federal Reserve’s July meeting on Wednesday.
“The Chinese have created an air of fragility around the globe. Markets will now surely have to firm up considerably for the Fed to pull the trigger next month”, said Deutsche BankDB -3.27 % analyst Jim Reid. Oliver said concerns have been fueled by devaluations by China and Vietnam, falling commodity prices, the Bangkok bombing and China’s deadly explosion in Tianjin.
Wall Street is headed for its worst week of the year as concerns over the health of the global recovery continue to dominate investor sentiment. “We’re in the latter camp”, he said.
There were glimmers of good news, with a report Friday indicating the eurozone economy picking up some steam in August.
Friday’s stock market tumble could only be described as a rout. Emerging market assets also took a hammering, and oil prices were on track for their longest losing streak since 1986, as fears of a China-led deceleration in global growth gripped markets.
Hormel Foods, a meat processor and food products company, rose 1.2 per cent as it raised its earnings forecast to $US2.57-$US2.63 per share from $US2.50-$US2.60 per share.
It suggests that the Chinese manufacturing industry is now in contraction. Economists expect the country’s GDP to contract by more than 2% this year.