Stocks slump in fallout from China rout

The fallout from yesterday’s rout in Chinese markets cost investors in European stocks around €450 billion yesterday.

Stock markets in Frankfurt and Paris reacted by falling 4.7 and 5.4 per cent respectively. The market in Athens, already down, slumped 10.5 per cent.

The pan-European FTSEurofirst 300 ended 5.4 per cent lower, wiping about €450 billion off its market capitalisation, its worst daily closing performance since November 2008.

DUBLIN

The Irish market reflected the rest, with 36 stocks falling and only three gaining ground.

Building materials giant CRH, the biggest single constituent of the Iseq index, dropped 5.87 per cent to €23.575, a fall that traders said was "not out of context" with what was happening generally.

While it has a presence in China, the market is not as important to the group as the US and Europe. Just over 2.9 million of its shares changed hands in Dublin. It is due to publish interim results on Thursday.

One of the biggest losers of the day was homegrown insurer FBD, whose share value plunged by 20.56 per cent to €5.402 after it unveiled €96 million losses for the first half of the year and announced that it plans to cut costs, change strategy and raise cash.

Insulation specialist Kingspan was off 4.89 per cent at €20.325 despite producing a record set of interim results showing profits were up more than 60 per cent at €108 million.

Packaging group Smurfit Kappa dropped 6.14 per cent to €24.475. Low-cost airline Ryanair was down 5.6 per cent at €11.38.

Among the banks, retail lender Permanent TSB's shares tumbled 4.71 per cent to €4.65. Bank of Ireland lost 6.07 per cent to close at 32.5 cent. AIB fell 9.52 per cent to 7.6 cent.

LONDON

Britain’s top share index slumped to its lowest level in almost three years, with all stocks but one in the red. The blue-chip FTSE 100 closed down 4.7 per cent to 5,898.87, its lowest level since late 2012.

The mining sector led the fallers, dropping 9 per cent to its lowest level since 2009 as fears about China's slowdown continued to bludgeon commodity prices. Glencore and Anglo American fell to all-time lows, tumbling 13.02 per cent and 7.23 per cent respectively.

Irish-based Tullow Oil slid 9.55 per cent to 183.35p as crude prices fell sharply.

EUROPE

Investors fled emerging markets equities, car makers and resource companies, all of which have potentially big exposures to China. The pan-European FTSEurofirst 300 was down 7.8 per cent at one stage, its worst intra-day loss since just after the demise of US investment bank Lehman Brothers in October 2008.

BMW shed 3.99 per cent to close at €76.93. Rival Daimler was off 4.68 per cent at €67.08.

The Stoxx Europe 600 Basic Resources Index, whose constituents are mostly mining stocks, fell 9.3 per cent and energy shares lost 8.1 per cent. China is one of the world’s biggest users of metals and oil. Shares in banks and asset managers also fell, and the Euro Stoxx Volatility Index rose to its highest since late 2011, more evidence of investor unease.

US

US stocks staged a stunning recovery off their lows yesterday, helped by a sharp turnaround in Apple's shares, but were still down about 2 per cent in afternoon trading.

Apple, which slid as much as 13 per cent, reversed course to trade up 1.3 per cent at $107.15 by 1:30pm eastern time. Apple's turnaround helped the Nasdaq composite and the S&P 500 indexes pull away from levels that would have put them into correction mode. An index is considered to be in correction when it closes 10 per cent below its 52-week high.

Oil majors Exxon and Chevron recovered somewhat to trade down about 1.5 per cent, having fallen more than 6 per cent earlier. US oil and gas companies have lost about $310 billion (€267 billion) of market value this year. – Additional reporting: Bloomberg, Reuters