Dow drops more than 500 points as US markets plummet amid global sell-off
Most major markets around the world suffer bruising losses as investors worldwide become increasingly concerned about Chinese economy
“China has sent shockwaves through global markets and raised numerous questions on the outlook,” analysts at Societe Generale said. “To our minds, the gradual recovery taking shape in the advanced economies can weather what we expect will be a prolonged period of weaker growth in a number of the major emerging markets.”
David Madden, market analyst at IG, said: “China has been on a mission to keep up the illusion of a gradual slowdown, but dealers aren’t buying it anymore.”
Nigel Green, chief executive of financial consulting firm deVere Group, told Reuters: “There are many, and legitimate, contributing factors to the global economic slowdown narrative. These include China-related issues, such as the recent devaluation of its currency, the stock market’s boom and bust in recent months, and slower GDP growth.
“I believe that this volatility is likely to remain with us, at least until the end of the year ... But for most long-term investors, fears of a near-term financial apocalypse are overdone.”
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Connor Campbell, an analyst at Financials, predicted more lows to come. Oil and mining stocks were “drowning in losses” from the beginning of the day, he said.
Crude oil prices, which have come under growing pressure from oversupply from the US, Russia and the Middle East, fell in response to concerns that lower manufacturing output in China will cut world demand. Brent crude closed at $45.30 a barrel, down from more than $60 in June and $115 little more than a year ago.
Lower oil prices are expected to boost growth in the US, Japan and the major importing nations in Europe in the longer term, but the initial impact has been felt on emerging economies that export oil and other basic commodities that have also slumped in price.
Oil’s run of weekly losses is its worst since 1986, when the Organization of the Petroleum Exporting Countries (Opec) ramped up production and sent it as low as $10 a barrel.