Stock markets around the world saw steep drops again Thursday, following big losses on Wall Street on Wednesday brought about by growing concerns for the Global economy.
Oil and other commodities along with energy and mining stocks, which are typical indicators for global growth, are all sharply lower as investors avoid any kind of trade anchored on growth in China and the rest of the emerging economies, even if these markets account for close to 85% of the world’s population.
Since the 2008 financial crisis, emerging markets have accounted for more than half of the world’s GDP and have primarily been the driver for global growth. Investors remain bearish, however, given how capital has flowed out of these markets with China seeing capital outflows of more than $100 billion just in the last month.
With the Federal Reserve tightening its monetary policy and China’s economic model showing its weakness, sentiments were weighted down further.
Meanwhile, crude oil futures dropped to a new 13-year low at $29.72 a barrel before recovering to $30.73 by 0600 ET.
In currencies, the New Zealand dollar saw its value drop by 1.5% against the U.S. dollar. Many in the financial markets view the country’s economy and currency as proxy for the Chinese demand for agricultural commodities. The same is true for Australia’s dollar vis-à-vis Chinese demand for industrial commodities.
The U.S. dollar gained against several currencies following global events including the terror attacks in Indonesia, political instability in Turkey, and fears of the U.K. leaving the European Union, among others.
The Japanese yen, considered a safe bet on conditions like this, lost some of its appeal after orders for its machinery fell by 25.8% in November.
In stocks, U.K.’s Burberry Plc (burby) saw its share value increase by 4% after it revealed strong sales in the Chinese market. This bit if good news, however, was quickly tempered by reports of slumping sales in Hong Kong. More on U.K. stocks, Tesco Plc (tscdy) also saw its stock inch up by 4.2% following stronger-than-expected numbers from the holiday season.
Conversely, Renault (rnsdf) shares plummeted by 20% after its headquarters and facilities were raided in connection with a probe about the way it uses exhaust emissions technology. Renault share prices have since recovered, down by just 9% in mid-afternoon trading after the carmaker issued a statement saying no emissions cheating devices were found by French anti-fraud investigators.