Wall Street took a pounding overnight, as investors panicked about how a deceleration in the Chinese economy would manifest as slower global growth.
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Pressures have been “building up in emerging markets”, said Charlie Wilson, portfolio manager for the Thornburg Developing World Fund, which manages $1.7 billion and invests in companies that are economically tied to emerging markets.
For his part, Braakman said, “we don’t really think there’s urgency for the Fed to start tightening [rates]”.
The Dow Jones Industrial Average (DJIA – 16,990.69) ended at a session – and year-to-date – low, down 358 points, or 2.1%. Japan’s Nikkei 225 Index fell by 0.9 percent, while Hong Kong’s Hang Seng Index tumbled by 1.8 percent. Europe was trading lower. France’s CAC-40 declined 2.1% and Germany’s DAX lost 2.3%.
Biotechnology stocks saw substantial weakness, dragging the NYSE Arca Biotechnology Index down by 4.6%.
Even before Greeks voted to reject bailout proposals from the country’s worldwide creditors and China’s stock market began to tumble last month, the U.S. Federal Reserve was questioning its stance on an interest rate increase planned for sometime later in 2015.
“The pattern didn’t change overnight, but it got called by Disney for the first time on their earnings”, said Hogan.
Shares fell Thursday as a fresh sell-off in China and sinking commodities prices shook up investors already jittery over a possible interest rate hike by the U.S. Federal Reserve. The latest reading on weekly jobless claims, also rose more than expected last week. The Dow is down 7% from its peak in May.
On the economic front, the Consumer Price Index (CPI) for All Urban Consumers added 0.1 percent in July on a seasonally adjusted basis, below market consensus of 0.2 percent, the US Labor Department reported on Wednesday. Asian and European markets are seeing steep sell-offs.
Brazil’s currency value has declined over 20% and Russia’s has fallen 40%, hurting imports and everyday citizens.
The U.S. stock market is opening sharply lower following a renewed drop in Chinese shares. Yields fall as prices rise.
“This view seems to have deteriorated somewhat with the S&P 500 closing below its multi-month trading range – a fate the credit markets and US yield curve have been screaming for some time”.
Light crude for near-term delivery rose 34 cents to $41.14 a barrel on the New York Mercantile Exchange, although speculation mounted that prices might sink closer to the $30-a-barrel level in coming weeks. “People want something stable that they can hold”.
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Ultralow interest rates have helped spur a rally in stocks since the financial crisis, which has prompted investors to monitor closely the Fed’s timeline for rate increases.
