The Dow has fallen over 5% so far this week. Investors wondered whether that meant the growth here is fragile, and started selling stocks.
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New York’s light sweet crude plunged Friday to $40.04 per barrel, the lowest level since March 2009, as the market was rattled by China jitters. Some economists are concerned that a hike in interest rates and a subsequent increase in mortgage rates could lead to a fall in housing prices and jobs slowdown. “This is about growth”.
The FTSE 100 index of leading shares closed on Friday down 180.24 points at 6,187.65 to cap off its worst losing streak since 2011.
Its surprise devaluation also triggered other governments to drive their currencies lower, roiling financial markets and spreading fears of a currency war. Analysts, investors, consultants, and an entire zoo full of “China bears” have been churning out reports on what a potential Chinese economic slowdown will look like for months, even years. On Friday, they got more bad news: A private survey showed another drop in manufacturing on the mainland. The Standard & Poor’s 500 Index headed for its worst week since 2012. At the current level of 16,4569.75, the Dow Jones Industrial Average is now more than 10% below its high for the year; meaning that the Dow is in the midst of a technical correction.
China CSI300 stock index futures for September fell 7.1 percent, to 3,233.6, or 109.37 points below the current value of the underlying index, and all other futures contracts were also negative.
But Mr. Gordon said measures such as China’s or a reported plan by Taiwan’s Financial Supervisory Commission to ban the short selling of stocks below the closing prices of the previous business day were unlikely to have much impact.
Those worries are valid, said Jeremy Zirin, head of investment strategy at UBS Wealth Management.
And the ongoing uncertainty over the timing of the US Federal Reserve’s long-awaited interest rate hike is compounding the problem, experts said.
“They have the luxury of being able to wait and see what happens”, Perli said.
Global stock markets are getting a gut check this week. Still, many money managers so far see this as an orderly correction for stocks and not a panic-driven disaster.
While it can be hard at times to determine the exact cause of market movements, that’s not the case for Friday’s declines. The selloff intensity matched that in Europe, where major indices lost between 2.8 percent and 3.2 percent.
The benchmark Shanghai Composite opened dramatically lower, shedding 8.4% in early trading.
The Hong Kong China Enterprises Index lost 4.5 percent, to 9,732.62.
In the commodity markets, gold gained $6.40 to settle at $1,159.60 an ounce. Brent crude, a benchmark for global oils used by many U.S. refineries, fell $2.50 to $42.96 a barrel.
A wide range of commodities have been hammered this year as demand for raw materials has cooled and as the U.S. dollar gains strength against currencies used by developing countries.
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“The scale of the current emerging market crisis is wider than the scares in 2013 and 2014”, The Telegraph quoted analysts at Danske Bank as saying.
