World markets suffer worst one-day falls in nearly four years

World stock markets will open on Monday seeking to recover from the worst one-day falls in nearly four years.

US and European shares tumbled and commodity prices slid further yesterday, with US markets closing last night down by more than 3 per cent, reflecting similar losses in European markets earlier in the day.

The Standard and Poor’s 500 Index capped a weekly loss of 5.8 per cent, its worst drop in almost four years.

The turmoil in the markets is highlighting concerns amid investors that the US, UK and Europe may not resume growth quickly enough to make up for the slowdown in emerging markets.

It has also increased speculation that the US Federal Reserve Board might hold off on increasing interest rates next month, as had been expected.

The collapse was triggered by fresh data from China suggesting its manufacturing sector shrank at its fastest pace in more than six years in August as domestic and export demand dwindled.

This comes just a week after the devaluation of the renminbi and in the wake of a sharp plunge in the Chinese stock market, adding to mounting concerns about the health of the Chinese economy.

Emerging market assets also took another hammering and oil prices headed toward their longest losing streak in almost 30 years, threatening to dip below $40 (about €35) a barrel for the first time since the financial crisis.

Dublin’s Iseq

Dublin's Iseq also fell by 3 per cent, with notable losses for index heavyweights such as CRH, Ryanair and Smurfit Kappa.

Figures released yesterday showed growth in the US manufacturing sector slowed unexpectedly to its weakest pace in almost two years in August.

Traders said the falls in US stocks were driven by fears that China’s worst domestic slowdown since the global financial crisis could spread to both developed and other emerging markets.

Additional reporting: Reuters, Bloomberg