Global Shares Fall After China’s Weak PMI Data
Global shares fell Tuesday, burdened by disappointing manufacturing data out of China, which fueled fresh concerns over growth in the world’s second-largest economy.
The Stoxx Europe 600 fell 1.4% in early trade, while Germany’s DAX lost 1.8% and France’s CAC 40 declined 1.5%. The U.K.’s FTSE 100 was 0.9% lower, having remained closed on Monday for a holiday.
In Asia, the Shanghai Composite, which has swung wildly in recent weeks, fell nearly 5% early in the session, and was recently 1.3% lower. In Hong Kong, the Hang Seng Index fell 0.5%, while Japan’s Nikkei lost 3.8%.
Stocks around the world ended their worst month in years on Monday in performance terms, driven by Chinese growth concerns coupled with uncertainty over the timing and pace of a rise in U.S. interest rates.
Last month, the Stoxx Europe 600 suffered its largest one-month percentage decline since August 2010, dropping around 8.5%. In the U.S., the Dow Jones Industrial Average fell more than 6% in August, representing its biggest percentage decline since May 2010.
Futures contracts pointed to a 1.4% opening loss for the Dow on Tuesday. Futures, however, don’t necessarily accurately reflect moves after the opening bell.
Fresh losses in Asia and Europe Tuesday followed the release of China’s official manufacturing purchasing managers index for August, which fell to 49.7, from 50.0 in July, marking its lowest level since August 2012. A number below 50.0 implies a contraction of manufacturing activity.
Separately, the Caixin China manufacturing purchasing managers index, a gauge of nationwide manufacturing activity, declined to a final reading of 47.3 in August from 47.8 in July. That represents its lowest level in more than six years, Caixin Media Co. and research firm Markit Ltd. said.
The latest manufacturing data underscore investors’ fears about China’s growth, Valentin Marinov, a currency strategist at Crédit Agricole, wrote in a note to clients. He said the “apparent inability of the Chinese officials to contain the market selloff” was exacerbating existing worries.
The euro, which in recent months has tended to do well during times of market volatility, was recently 0.6% higher against the U.S. dollar at $1.129. The dollar was 0.6% lower against Japan’s yen at ¥120.40. The yen also traditionally enjoys a strong bid during times of market turmoil.
Brent crude, which is particularly sensitive to China, was recently 2.8% lower at $52.65. Gold was up around 0.9% at $1,142.50 per troy ounce.