Business

FTSE slumps as grim US figures stoke worries over global economy | Business News

By October 2, 2019 No Comments
Traders at London's BGC Partners after Donald Trump's election victory, 9 November 2016

Stock markets have fallen sharply on growing worries about the global economic outlook and signs that the fallout from the US-China trade war is hurting America’s economy.

The globally focused FTSE 100 fell 160 points, or more than 2%, in Wednesday trading as investors responded to US manufacturing data showing the worst performance for the sector in a decade.

Equipment hire giant Ashtead – which earns most of its revenues in the US – was among the biggest fallers on the London blue chip index, together with global mining giants such as Antofagasta.

Germany’s Dax and France’s Cac 40 were also down sharply – with the declines coming after Wall Street tumbled to four-week lows on Tuesday.

Selling was triggered after the closely watched Institute for Supply Management (ISM) index of factory activity dropped to the lowest level since 2009.

It dashed economists’ hopes that a previous contraction for the sector in August may have been a blip.

July 2019: ‘For every step forward, we take a step back’ on trade war

Donald Trump fired off a tweet blaming the US Federal Reserve for not cutting interest rates as much as he would have liked.

A slowdown in US growth would remove one of the few bright spots for the world economy at a time when the eurozone outlook looks weak, with Germany and the UK both teetering on the edge of recession and a possible no-deal Brexit looming.

Manufacturing readings in Europe and the UK were also bleak on Tuesday, while on Wednesday the latest monthly survey of Britain’s construction sector showed that it too was stuck in a downturn.

There was further gloom when Germany’s leading economic institutes slashed growth forecasts for Europe’s biggest economy, blaming weaker global demand for manufactured goods and increased business uncertainty due to trade disputes.

Chris Beauchamp, chief market analyst at IG, said: “Equities are in full retreat this morning, with 1% losses or more common across European stock markets.

“The risk-off atmosphere created by yesterday’s US ISM miss continues to hang over markets.

“European equities have turned firmly lower in early trading, on the very reasonable assumption that, if things are that bad for the US, then they must be even worse for Europe.”

Leave a Reply