Oil prices plunged, stockmarkets sold off heavily and there seems to be more to come today after the weak Chinese manufacturing activity reports renewed fears about the health of the world’s most important economy.
The first day of spring in the southern hemisphere saw a complete absence of confidence among investors here and offshore as they just sold and sold.
The weak manufacturing figures for China were the main trigger, but reports on the health of manufacturing in many other major economies in Asia, Europe and the US revealed a trend towards slowing levels of activity, falling orders and weakening demand.
Wall Street lost more than 2% in the third biggest fall of the year, markets across Europe lost between 2% and 3%, despite figures showing the lowest eurozone unemployment levels in three and a half years.
That was after a sell off in Asia – Shanghai was down 5% at one stage, but recovered to be down 1.2% at the end. All eyes will again be on Shanghai for the morning opening to see how the markets start.
Our market will be down more than 60 points or 1.4% at the opening after yesterday’s 2.2%, 110 plunge which was made worse by the weak Chinese data.
The Aussie dollar dipped to new six year plus lows overnight around 70.13, and could go under 70 cents later today if the June quarter GDP figures are worse than expected.
Wall Street saw its third-worst loss of the year overnight as a global sell-off again gripped markets for a second week.
The S&P 500 sank 58.33 points, or 3%, to 1,913, with red ink across the board. The Dow lost 469.68 points, or 2.8%, to 16,058.35. All 30 of its components closed lower.
Oil companies led the market lower as futures prices shed much of Monday’s 8% surge. A number of companies revealed another round of spending and job cuts as well, which added to the gloom.
And the Nasdaq Composite slumped 140.40 points, or 2.9%, to 4,636.10, falling into negative territory for the year.
Marketwatch.com said the falls overnight were the third-biggest daily drop of the year for the S&P 500 and the Dow, while for the Nasdaq, it is the third worst by percentage decline.
Meanwhile oil prices gave up some of their big gains of the previous three trading sessions. Oil futures fell on Tuesday, thanks to the weak Chinese manufacturing data, ending three-session climb of more than 27%.
In New York, October West Texas Intermediate crude fell $US3.79, or 7.7%, to settle at $US45.41 a barrel on the New York Mercantile Exchange. That saw the market give back most of the $US3.98, or 8.8%, surge on Monday.
In London, October Brent crude futures fell $US4.59, or 8.5%, to $US49.56 a barrel, following a two-session climb of more than 15%. The falls were nothing more than the retracement of higher than expected gains on Monday and late last week. More falls will follow.
Comex gold futures meanwhile jumped to two week highs overnight, in New York. Gold futures for December delivery jumped $7US.30, or 0.6%, to settle at $US1,139.80 an ounce on Comex.
Comex December silver rose 3.4 cents, or 0.2%, to end at $US14.62 an ounce.
But December Comex copper ended at $US2.302 a pound, down 3.6 cents, or 1.5% and wiping out August’s gain of just under 1%.
