US OPEN
Just when you thought things might ease, US shares crashed out again on Tuesday, with the Dow Jones dropping 360 points to 16,165 as traders around the globe took flight after weak China data.
The tech heavy Nasdaq dropped 95 to 4,684, while the broader based S&P500 eased 42 to 1,930.
It came after China reported another contraction in manufacturing figures overnight and analysts said the data simply provided more confirmation that Chinese economic momentum was slowing down.
European markets were also feeeling the pain, with the FTSE100 dropping 192 points and inching ever closer to going below the 6,000 level again.
Joshua Mahony, at spreadbetter IG, noted that today, the importance of today's China statement was that the slowdown was hitting the larger state-backed firms who typically take longer to feel the pain than the SME's covered by the Caixin measure, which has been in contraction since February.
"Chinese markets have started the week just as the past three weeks have begun, with widespread selling and the expectation that the worst may not yet be over. There are precious few signs that China is beginning to recover, and while PBoC action can provide a temporary reprieve, we are yet to see any evidence that it is doing any good to the economy."
Meanwhile, Fed commentary at the banker symposium over the weekend did little to ease concern on the timing of an interest rate rise across the pond.
In company news, energy group Penn West dropped 7.8% after it revealed its latest round of spending cuts, saying it would reduce staff by 35%, suspend the dividend and cut back on spending.
Elsewhere, Yahoo (NASDAQ:YHOO), the search engine giant shed 1.89% as its chief executive officer Marissa Mayer announced she is pregnant with identical twin girls, likely due in December.
"Since this is a unique time in Yahoo's transformation, I plan to approach the pregnancy and delivery as I did with my son three years ago, taking limited time away and working throughout," Mayer wrote in a blog post late on Monday.
Dollar Tree (NASDAQ:DLTR), the second-largest U.S. dollar-store retailer, went 7.55% lower to US$70.51 as it provided gloomy revenue outlook while swinging to a quarter loss, amid fierce competition and as it focuses on closing of the Family Dollar Stores.
Revenue this year is anticipated to be $15.3bn to $15.5bn, the Chesapeake, Virginia-based company said in a statement on Tuesday. That fell short of the $15.6bn average estimate of 9 analysts polled by Capital IQ.
Energy firm Phillips (NYSE: PXE) shares lost 1.66% after mega investor Warren Buffett revealed he has a 10.8% stake, which has cost $4.5bn. Berkshire Hathaway lost 2.4%.
MID-SESSION UPDATE
London shares stayed firmly in the red on Tuesday after more downbeat Chinese economic data.
The FTSE 100 Index fell 141.61 points to 6106 following another contraction in manufacturing figures overnight.
Markets were expecting a fall, but analysts said the data simply confirmed that Chinese economic momentum was slowing down and that Beijing might miss its GDP targets.
Connor Campbell at spread-betting firm Spreadex said the US open was not looking positive, with futures pointing to the Dow starting around 300 points lower.
He said: "The US will then have to endure its own manufacturing data, with analysts forecasting a slight fall in the ISM figure."
There was mixed economic news in Europe, where stronger Purchasing Manager's Index (PMI) numbers from Germany and Spain contrasted with weaker figures in the UK, France and Italy.
In Germany, manufacturing PMI figures hit a 16-month high in August and Spanish output growth picked up to a three-month high.
But in the UK, the headline seasonally adjusted Markit/CIPS PMI dipped slightly to 51.5 in August, from 51.9 in July and well below the average of about 54 since the start of 2013.
Senior UK economist Samuel Tombs said: "August’s UK CIPS report on manufacturing shows that the strong pound is crimping exporters and so suggests that the major support net trade provided to GDP growth in the second quarter will be a blip."
The Bank of England reported another increase in unsecured consumer lending in July, which some said indicated that people were becoming more confident.
But Howard Archer at IHS Global Insight said: "There is the concern that consumers are becoming increasingly tempted to take on debt again to fund spending. Consumers need to allow for the fact that interest rates are set to start rising before long."
In thin corporate news, RSA Insurance (LON:RSA) was outperforming the market after talk that the UK firm, which has received a takeover approach from Swiss rival Zurich Insurance, could face a rival bid from Allianz of Germany or Generali of Italy.
RSA shares fell 1.5p to 512.5p but Aviva (LON:AV.) was off 12p at 471.8p, Prudential (LON:PRU) reversed 35.5p to 1382.5p and Admiral (LON:ADM) retreated 24p to 1526p.
Shares in Northcote Energy (LON:NCT) rose by 0.01p to 0.16p after the US oil explorer reported better-than-expected drilling results at a well in Louisiana.
Satellite operator Inmarsat (LON:ISAT) lost hold of early gains to fall 9.5p to 971.5p as it confirmed the successful launch into orbit of its third Global Xpress satellite.
Petroceltic International (LON:PCI) surged 7.75p to 61.25p on news that Italian super-major ENI had made the largest ever gas find in the Mediterranean in a block near to where the Ireland and UK-listed small-cap has licences.
Energy group Entu (LON:ENTU) dropped 27p to 65.5p as it ditched its loss-making solar business and issued a profit warning for 2015.
LONDON OPEN
London shares tumbled in excess of 100 points in early trading after more downbeat Chinese economic data.
The FTSE 100 Index fell 106 points to 6,141 following another contraction in manufacturing figures overnight.
Markets were expecting a fall, but analysts said the data simply provided more confirmation that Chinese economic momentum was slowing down.
Chief market analyst at foreign exchange group FXTM, Jameel Ahmad, said: "Chances of GDP growth falling below the government’s target are actually intensifying each time an economic announcement is released from China, mainly because all data is consistently pointing towards economic momentum declining in this major economy."
There was mixed economic news from Europe, where stronger Purchasing Manager's Index (PMI) numbers from Germany and Spain contrasted with weaker figures in the UK, France and Italy.
In Germany, manufacturing PMI figures hit a 16-month high in August. But in the UK, the headline seasonally adjusted Markit/CIPS PMI dipped slightly to 51.5 in August, from 51.9 in July and well below the average of about 54 since the start of 2013.
Senior UK economist Samuel Tombs said: "August’s UK CIPS report on manufacturing shows that the strong pound is crimping exporters and so suggests that the major support net trade provided to GDP growth in the second quarter will be a blip."
In thin corporate news, RSA Insurance (LON:RSA) was outperforming the market after talk that the UK firm, which has received a takeover approach from Swiss rival Zurich Insurance, could face a rival bid from Allianz of Germany or Generali of Italy.
RSA shares fell 2p to 512p but Aviva (LON:AV.) was off 12.8p at 471p, Prudential (LON:PRU) reversed 41p to 1,377p and Admiral (LON:ADM) retreated 16p to 1,534p.
Shares in Northcote Energy (LON:NCT) rose by a fifth to 0.18p after the US oil explorer reported better-than-expected drilling results at a well in Louisiana.
Satellite operator Inmarsat (LON:ISAT) was 1.5p higher at 982.5p as it confirmed the successful launch into orbit of its third Global Xpress satellite.
MARKET PREVIEW
New month, same old roller coaster ride. The stock market instability caused by China is expected to continue into September, with spread betting firm IG calling the FTSE 100 down 55 points on open to 6,192.94.
Overnight, Asia’s main markets were hit as two separate releases that revealed economic growth to be stuttering in the People’s Republic.
China's official manufacturing purchasing managers' index edged down below the contact line between expansion and contraction in August.
Meanwhile, the final Caixin/Markit index was pointed firmly towards an economy in retreat.
The Shanghai Composite fell 1.5%, dragging Japan’s Nikkei 225 down 2.6% and the Hang Seng in Hong Kong 0.9% lower.
In the US, which was open for business Monday, the Dow closed the day off 0.7%, while the broader-based S&P 500 fell 0.8%.
Again nerves over China, coupled with the direction of interest rate policy at the next Federal Reserve meeting, left investors nursing losses.
In the US, the stock markets haven’t performed this poorly over one calendar month for five years, while here in the UK this is the Footsie’s worst showing over that period since 2011.
“After a roller-coaster August, investors will no doubt be hoping that September will be much less turbulent than it has been in recent weeks,” said Michael Hewson of CMC Markets.
Some hope of that judging by the way things kicked off in Asia overnight.
Corporate news is expected to pick this week and will be transport-dominated with British Airways owner IAG, EasyJet and coach operator Go-Ahead among the larger caps reporting this week.