Home' Trinidad and Tobago Guardian : August 23rd 2015 Contents AUGUST 23 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
STOCKS | SBG9
Growing concerns about a slowdown in China
shook markets around the world on Friday,
driving the US stock market to its biggest
drop in nearly four years. The rout started in
Asia and quickly spread to Europe, battering
major markets in Germany and France. In
the US, the selling started early and never let up. Investors
ditched beaten-down oil companies, as well as Netflix, Apple
and other technology darlings. Oil plunged below US$40 for
the first time since the financial crisis, and government bonds
rallied as investors raced into hiding spots.
"Investors are wondering if growth isn t coming from the
US or China, where is it going to come from?" said Tim Court-
ney, CIO of Exencial Wealth Advisers. "This is about growth."
By the time it was over, the Standard and Poor s 500 index
had lost 5.8 per cent for the week, its worst weekly slump
since 2011. That leaves the main benchmark for US investments
7.7 per cent below its all-time high; within shooting range of
what traders call a "correction," a 10 per cent drop from a
Markets began falling last week after China announced a
surprise devaluation of its currency, the yuan. Investors have
interpreted China s move as a sign that flagging growth in
world s second-largest economy could be worse than govern-
ment reports suggest. On Friday, they got more bad news: A
private survey showed another drop in manufacturing on the
The Standard & Poor s 500 index dropped 64.84 points, or
3.2 per cent, to close at 1,970.89.
The Dow Jones industrial average fell 530.94 points, or 3.1
per cent, to 16,459.75. That s 10 per cent off its high, a cor-
The Nasdaq slid 171.45 points, or 3.5 per cent, to 4,706.04.
"Concerns about slowing growth in China are certainly
valid," said Jeremy Zirin, head of investment strategy at UBS
Wealth Management. "But there doesn t seem to be any signal
that the weakness abroad is slipping into the US economy."
Investors pointed to other reasons behind the recent sell-
off, such as falling prices for oil and other commodities as
well as the relatively high prices investors pay for US stocks
compared with corporate earnings.
"All of this is coming at a time when we haven t had a cor-
rection" in many years, Zirin said. The last correction occurred
in October 2011.
Roberto Perli, head of global monetary policy research at
Cornerstone Macro, said the market s recent slump likely
means the Federal Reserve won t raise its benchmark interest
rate at its September meeting. Fed officials gathering next
month will have to weigh the global pressures against evidence
of a solid U.S. job market and improving US economic growth.
"They have the luxury of being able to wait and see what
happens," Perli said. "But if the meeting was tomorrow, it s
probably fair to say that they wouldn t tighten given all the
turmoil in the global markets."
For all the markets jitters, many economists say they remain
confident that the US economy is resilient enough to withstand
a slowdown in the developing world. And Europe s economy
appears to be emerging from its long slump.
Major markets in Europe finished with deep losses on Friday.
France s CAC-40 fell 3.2 per cent while Germany s DAX lost
2.9 per cent. In Britain, the FTSE 100 index dropped 2.8 per
In Asia, the Shanghai Composite index suffered another
steep drop of 4.3 per cent. Japan s Nikkei 225 lost three per
cent, South Korea s Kospi shed two per cent and Hong Kong s
Hang Seng fell 1.5 per cent.
Back in the US, government bond prices rose, pushing the
yield on the 10-year Treasury note to 2.04 per cent.
In the commodity markets, gold gained US$6.40 to settle
at US$1,159.60 an ounce, while silver slipped 22 cents to
US$15.30 an ounce. Copper lost 2 cents to US$2.30 a pound.
The price of US oil briefly dipped below US$40 a barrel for
the first time since March of 2009. US crude fell 69 cents
to close at US$40.45 in New York. At one point, it fell as low
as US$39.86 in midday trading. Brent crude, a benchmark for
international oils used by many US refineries, fell US$1.16 to
close at US$45.46 in London.
In other trading on the NYMEX:
--- Wholesale gasoline rose 1 cent to close at US$1.545 a gal-
--- Heating oil fell 3.4 cents to close at US$1.462 a gallon.
--- Natural gas fell 7.9 cents to close at US$2.676 per 1,000
cubic feet. AP
How the world's major stocks markets have
done this month
The Dow Jones industrial average: down 7 per cent in Au-
gust, and 7.7 per cent in 2015.
The Standard & Poor's 500 index: down 6.3 per cent this
month, and 4.3 per cent this year.
The Nasdaq composite: down 8.2 per cent this month, and
0.6 per cent this year.
Germany's DAX: down 10.5 per cent in August, but up 3.3
per cent in 2015.
France's CAC-40: down 8.9 per cent this month, but up 8.4
per cent this year.
UK's FTSE 100: down 7.6 per cent this month, down 6 per
cent this year.
Japan's Nikkei index: down 5.6 per cent in August, up 11.4
per cent in 2015.
Hong Kong's Hang Seng: down 9 per cent this month, and
down 5.1 per cent this year.
China's Shanghai Composite: down 4.3 per cent this
month, and up 8.4 per cent this year.
tumble on global
A woman using a smartphone walks by an electronic stock board of a securities firm in Tokyo, Friday, August 21, 2015. Tokyo's
Nikkei 225 plunged two per cent in the morning session as Asian stocks fell further Friday after a survey showed Chinese
manufacturing weakened this month. AP
Investors monitor stock prices at a brokerage in Beijing, on
Friday, August 21, 2015. Asian stocks fell further Friday after
a survey showed Chinese manufacturing weakened this
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