World stock markets tumbled and oil plumbed new depths today as investors feared for the global economy on signs of a dramatic slowdown in powerhouse China.
European stock markets plunged in morning deals following a heavy sell-off across Asia triggered by a suspension to trading in China, the world’s second biggest economy and key driver of commodities consumption.
Meanwhile officials and leading financiers warned of the dangers to the global economy and the threat of another dangerous market crash, with the World Bank cutting its global growth forecasts again.
At about 0815 IST, London’s benchmark FTSE 100 index was down a hefty 2.0 percent compared with yesterday’s close, while leading eurozone markets Frankfurt and Paris shed 2.4 and 1.9 per cent respectively.
Meanwhile Wall Street opened down sharply, with the Dow down 1.3 per cent in early trading.
“Equity markets are continuing their steep losses… with investor sentiment being pressured by various factors,” said Lukman Otunuga, research analyst at trading group FXTM.
“These include the resumption of fears over global growth following weak data from China… while increased geopolitical tensions between Saudi Arabia and Iran and an unexpected nuclear test from North Korea have also encouraged investors to dodge away from riskier assets.”
The week’s geopolitical developments have combined to heap further pressure on oil prices, sending New York’s main crude contract sliding today to a 12-year low at USD 32.10 a barrel.
But gold was benefiting from its status as a haven investment, while a “rush to the safety of sovereign bonds is underway,” noted Brenda Kelly, head analyst at London Capital Group.
“The (German) bund is helping the euro retrace higher against the dollar and the pound,” she added in a note to clients.
The euro, up to USD 1.0843, won a boost also as official data showed that eurozone unemployment dropped to its lowest level in four years in November.
Chinese markets were suspended today for the second day this week after they fell more than seven per cent, leading an Asia-wide sell-off as Beijing weakened the value of the yuan currency by the most since August.
Regulators in China called an end to trade within just 30 minutes of opening after the central bank weakened the value of its yuan currency by 0.51 per cent against the dollar.