Global Shares Fall After China’s Weak PMI Data
U.S. stocks are poised to open more than 2% lower
By JOSIE COX
Updated Sept. 1, 2015 8:11 a.m. ET
Global stock markets tumbled Tuesday after weak manufacturing data in China fueled investors’ worries about the world’s second-largest economy.
Stock futures pointed to declines at the open in the U.S., and shares in Europe and Asia fell. The price of oil, which had rallied in recent days, slumped.
Futures contracts indicated a 1.9%, or 307-point, opening loss for the Dow Jones Industrial Average and a 1.9% fall for the S&P 500. Futures, however, don’t necessarily accurately reflect moves after the opening bell.
Commodities and stocks around the world have swung sharply in the weeks since China devalued the yuan, interpreted by some as a sign of Beijing’s concern about slowing growth. Financial markets had steadied over the past few sessions, but signs of turbulence returned Tuesday.
“International investors have become extremely concerned about the state of China’s real economy,” economists at UBS wrote in a note to clients, adding that some investors are fearful that the situation could still get worse.
The Stoxx Europe 600 was 2.2% lower just over halfway through the session. The Shanghai Composite fell nearly 5% before ending the day down 1.2%. Hong Kong’s Hang Seng Index fell 2.2% and Japan’s Nikkei lost 3.8%.
Stock indexes around the world suffered their biggest monthly losses in years in August. The Stoxx Europe 600 had its largest one-month percentage decline since August 2011. The Dow fell 6.6%, representing its biggest monthly percentage decline since May 2010. The Shanghai Composite fell 12.5%, notching its third straight month of declines.
But despite volatility having eased off in recent days, moves on Tuesday hinted that markets are still highly susceptible to shocks.
On Tuesday, China’s official manufacturing purchasing managers index for August fell to 49.7, from 50.0 in July, marking its lowest level since August 2012. A number below 50.0 implies a contraction.
Separately, the Caixin manufacturing purchasing managers index, a gauge of nationwide manufacturing activity, fell to more than a six-year low in August, according to Caixin Media Co. and research firm Markit.
“We believe that the clock is ticking towards further negative surprises,” Rabobank strategist Michael Every said about the data in a note to clients.
He said that policy responses from China aimed at encouraging stability had so far failed.
Chinese authorities have been trying to stabilize the domestic stock market since late June, cutting interest rates for the fifth time since November and pledging to support the market by buying stocks. More recently, Beijing has stepped up a crackdown on what they are labeling as securities violations.
Christine Lagarde, managing director for the International Monetary Fund, said Tuesday that the organization expects global economic growth to weaken and that Asia risks slowing further because of the recent volatility in financial markets.
“Asia as a region is still expected to lead global growth,” Ms. Lagarde said in a speech at the University of Indonesia. But even in Asia, the pace “is turning out a little bit slower expected—with the risk that it may even slow further given the recent spike in global risk aversion and in financial market volatility.”
The euro, which in recent months has tended to do well during times of market stress, was recently 0.2% higher against the U.S. dollar at $1.1245. The dollar was 0.9% lower against Japan’s yen at ¥120,13.
Brent crude, the global oil benchmark, fell 3.4% to $52.30 a barrel after oil prices surged over the previous three trading sessions. The U.S. oil benchmark was down 2.7% at $47.88. Gold rose around 0.8% to $1,141.00 a troy ounce.
Later this week, the European Central Bank is scheduled to hold its regular monetary policy meeting. Analysts expect President Mario Draghi to get questions about what recent market volatility could mean for Europe and the ECB’s bond-buying program.
On Friday, monthly U.S. nonfarm payroll figures could provide further hints on the timing of a U.S. interest rate rise.
Market turmoil has in recent weeks led some investors and analysts to push back their expectations for when the U.S. Federal Reserve will start to raise rates from rock-bottom levels.
Stephanie Lindeck, an economist at Julius Baer, wrote in a note to clients Tuesday, however, that she still thinks a move in 2015 is on the cards.
— Chao Deng in Hong Kong contributed to this article.
Corrections & Amplifications:
Last month, the Stoxx Europe 600 suffered its largest one-month percentage decline since August 2011. An earlier version of this article incorrectly said it was the largest one-month percentage decline since August 2010.
Write to Josie Cox at josie.cox@wsj.com
U.S. stocks are poised to open more than 2% lower
By JOSIE COX
Updated Sept. 1, 2015 8:11 a.m. ET
Global stock markets tumbled Tuesday after weak manufacturing data in China fueled investors’ worries about the world’s second-largest economy.
Stock futures pointed to declines at the open in the U.S., and shares in Europe and Asia fell. The price of oil, which had rallied in recent days, slumped.
Futures contracts indicated a 1.9%, or 307-point, opening loss for the Dow Jones Industrial Average and a 1.9% fall for the S&P 500. Futures, however, don’t necessarily accurately reflect moves after the opening bell.
Commodities and stocks around the world have swung sharply in the weeks since China devalued the yuan, interpreted by some as a sign of Beijing’s concern about slowing growth. Financial markets had steadied over the past few sessions, but signs of turbulence returned Tuesday.
“International investors have become extremely concerned about the state of China’s real economy,” economists at UBS wrote in a note to clients, adding that some investors are fearful that the situation could still get worse.
The Stoxx Europe 600 was 2.2% lower just over halfway through the session. The Shanghai Composite fell nearly 5% before ending the day down 1.2%. Hong Kong’s Hang Seng Index fell 2.2% and Japan’s Nikkei lost 3.8%.
Stock indexes around the world suffered their biggest monthly losses in years in August. The Stoxx Europe 600 had its largest one-month percentage decline since August 2011. The Dow fell 6.6%, representing its biggest monthly percentage decline since May 2010. The Shanghai Composite fell 12.5%, notching its third straight month of declines.
But despite volatility having eased off in recent days, moves on Tuesday hinted that markets are still highly susceptible to shocks.
On Tuesday, China’s official manufacturing purchasing managers index for August fell to 49.7, from 50.0 in July, marking its lowest level since August 2012. A number below 50.0 implies a contraction.
Separately, the Caixin manufacturing purchasing managers index, a gauge of nationwide manufacturing activity, fell to more than a six-year low in August, according to Caixin Media Co. and research firm Markit.
“We believe that the clock is ticking towards further negative surprises,” Rabobank strategist Michael Every said about the data in a note to clients.
He said that policy responses from China aimed at encouraging stability had so far failed.
Chinese authorities have been trying to stabilize the domestic stock market since late June, cutting interest rates for the fifth time since November and pledging to support the market by buying stocks. More recently, Beijing has stepped up a crackdown on what they are labeling as securities violations.
Christine Lagarde, managing director for the International Monetary Fund, said Tuesday that the organization expects global economic growth to weaken and that Asia risks slowing further because of the recent volatility in financial markets.
“Asia as a region is still expected to lead global growth,” Ms. Lagarde said in a speech at the University of Indonesia. But even in Asia, the pace “is turning out a little bit slower expected—with the risk that it may even slow further given the recent spike in global risk aversion and in financial market volatility.”
The euro, which in recent months has tended to do well during times of market stress, was recently 0.2% higher against the U.S. dollar at $1.1245. The dollar was 0.9% lower against Japan’s yen at ¥120,13.
Brent crude, the global oil benchmark, fell 3.4% to $52.30 a barrel after oil prices surged over the previous three trading sessions. The U.S. oil benchmark was down 2.7% at $47.88. Gold rose around 0.8% to $1,141.00 a troy ounce.
Later this week, the European Central Bank is scheduled to hold its regular monetary policy meeting. Analysts expect President Mario Draghi to get questions about what recent market volatility could mean for Europe and the ECB’s bond-buying program.
On Friday, monthly U.S. nonfarm payroll figures could provide further hints on the timing of a U.S. interest rate rise.
Market turmoil has in recent weeks led some investors and analysts to push back their expectations for when the U.S. Federal Reserve will start to raise rates from rock-bottom levels.
Stephanie Lindeck, an economist at Julius Baer, wrote in a note to clients Tuesday, however, that she still thinks a move in 2015 is on the cards.
— Chao Deng in Hong Kong contributed to this article.
Corrections & Amplifications:
Last month, the Stoxx Europe 600 suffered its largest one-month percentage decline since August 2011. An earlier version of this article incorrectly said it was the largest one-month percentage decline since August 2010.
Write to Josie Cox at josie.cox@wsj.com
