The US markets plunged on Friday, as fears about China’s economy and global growth spurred heavy selling, with the main indexes posting massive one-day selloffs and their biggest weekly declines in almost four years.
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Flash data tracking the Caixin China General Manufacturing Purchasing Managers’ index showed a reading of 47.1, according to Markit. European markets were also lower again on Friday, with the UK’s FTSE 100, Germany’s Dax and France’s Cac 40 all down about 0.5%, after the Dow Jones in the US closed down 2% on Thursday. Japan’s Nikkei 225 sank 3% to 19, 436 and Korea’s Kospi Index skidded 2% to 1,876.
The report said the preliminary reading on Chinese manufacturing activity dropped to 47.1 in August from 47.8 in July.
Growth of input buying picked up in August, but remained close to the 18-month low recorded in July amid reports from survey respondents citing cautious inventory policies. Still, growth remains weaker-than-desired, with real GDP down 0.4 percent in the second quarter. That brought losses for the week to 11 percent.
Gov’t borrowing in the first 4 months of the fiscal year was at its lowest since ’08-09.
Seoul shares tumbled, dragged down by heavyweights, as global economic uncertainties coupled with heightening military tension along the Korean Peninsula rattled investors. Moreover, stocks of finished goods fell for the first time in 2015 so far. North Korean leader Kim “pass the French fries” Jung-Un was reported to have ordered the army into a heightened state of war readiness. Market heavyweight Samsung Electronics slumped 3.3 percent and automaker Hyundai Motor dropped 2 percent.
It hit a 31 month high in July and has increased by 20 per cent over the last three months, suggesting activity will rebound later in the year.
Earlier in August, China’s official economic growth data had shown a further slowdown in the past quarter, expanding 7% compared to a year earlier, its slowest pace since 2009. Likewise, Trade Me Group jumped 8.7 percent after reporting better-than-expected earnings. The news weighed heavily on commodities prices, especially oil, as currencies of natural resources exporters took a tumble in Asia. And while there have been some signs of improvement recently, nobody is forecasting a burst of pent-up demand just around the corner.
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As risk appetite waned, investors largely shrugged off upbeat existing home sales and regional manufacturing activity data. The single currency rose to its highest level since March 2014 versus the Australian dollar at 1.5464.
