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Wall Street Falls Sharply on Weak China Data

Weak manufacturing data from China pushed global equities back into the red, with the FTSE 100 tumbling more than 3pc

Stocks on Wall Street confirmed investors are set for another rollercoaster ride on the world’s equity markets this week, as US markets tumbled into the red. Weak factory data from China reignited fears of a sharper slowdown in the world's second-largest economy.

Minutes after markets opened on Wall Street, the Dow Jones industrial average fell 2.4pc to 16,228, while the S&P slipped 1.8pc and the Nasdaq composite was off by 2pc. The Dow closed down 2.8pc, and the S&P and Nasdaq 3pc.

Disappointing Chinese Purchasing Managers' Index (PMI) data sapped investor confidence, with the country's manufacturing sector contracting at its fastest pace in three years, an official survey showed on Tuesday. China's PMI fell to 49.7 in August from 50.0 in July. Anything below 50 is considered a contraction.

Earlier in the day, China’s main indices plunged by as much as 5pc, before reversing some losses. The Shanghai Composite Index closed down 1.3pc at 3,166.62.

Joshua Mahony, of IG, said: “Chinese markets have started the week just as the past three weeks have begun, with widespread selling and the expectation that the worst may not yet be over.”

“There are precious few signs that China is beginning to recover, and while action by the People's Bank of China can provide a temporary reprieve, we are yet to see any evidence that it is doing any good to the economy,” Mr Mahony added.

Meanwhile, the FTSE 100, which closed 60.29 points higher on Fridayafter a tumultuous week, fell 194 points, or 3pc, just before 3pm - wiping about £49bn off the index.

Britain's benchmark index is now 15pc off its high in April of 7,104 and is set for its biggest one-day fall since 'Black Monday' on August 24.

 

 

Miners, which have borne the brunt of slowing growth in China, the world’s largest metals consumer, became FTSE laggards once more. Glencore became the biggest casualty, down 8pc, while BHP Billiton fell 6.5pc, Anglo American slipped 6.7pc, and Rio Tinto was 5.2pc lower.

 

Luxury goods maker Burberry - which has a string of shops in China - also slipped 4.7pc. Meanwhile mid-cap stock Man Group suffered a loss of 5.2pc in early trade after reports the boss of its Chinese unit was taken into custody as part of a probe into recent market volatility.

Meggitt emerged as the sole riser in afternoon trade, edging 7.8p, or 1.6pc, higher to 485.9p.

Mike van Dulken, of Accendo Markets, said: “Traders are asking whether this is a pause before another leg up, or merely the resumption of an ugly downtrend since mid-August."

European markets also fell sharply in early morning trade. The CAC in Paris slid 2.5pc, the German DAX was off by 2.6pc and the Spanish IBEX slumped 2.6pc.