Wall Street enters correction territory on stalling Chinese economy
Oil leads commodity price fall as Wall Street drop the most in four years.
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Hawke’s Bay
Wall Street's worst drop in four years is a perfect storm of more fears about the state of China’s economy, plunging world commodity prices and concern about the future of US interest rates.
The immediate trigger was Friday’s survey of Chinese industrial companies showing stagnant activity in August, 15
The manufacturing index hit its lowest level in six years.
Wall Street’s slide of four consecutive days took the Dow Jones Industrial Average to 10.1% below its record high in May – the market definition of a correction.
The Dow itself fell 3.1% on Friday and the other benchmark indexes also fell the most in a day since 2011.
In Europe, stocks fared no better, with London and Frankfurt recording their biggest two-week losses since 2011.
All European sharemarkets have fallen 10% in recent weeks, putting them also in correction territory.
Commodities fell, led by oil, with a 6.2% drop in futures trading to $US40.45 a barrel, the lowest price since 2009
While China is copping most of the blame, western traders find it hard to know what exactly is going on there.
The US Federal Reserve is now under pressure to hold off on its first round of interest rate rises that would reflect improving US economic conditions.
The high level of stocks in the US are also concerning because the next round of the reporting season is due in three weeks,
It is likely to show some major multinational companies will be stressed by lower profits from the surging US dollar.
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Nevil Gibson
Sun, 23 Aug 2015
Sun, 23 Aug 2015
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