NEW YORK, United States. The US stock market has suffered its biggest one-day drop in nearly four years, driven by growing fears about a slowdown in China.
The Dow Jones industrial average tumbled by 530.94 points, or 3.1%, to 16,459.75 – below the psychologically important 17,000 points.
It comes after a day of big losses abroad – the FTSE 100 in London ended the week 2.8% down , Germany’s DAX fell 2.9% and the Shanghai Composite in China dropped 4.3%.
Tokyo’s Nikkei 225 index plunged 3% and Hong Kong’s Hang Seng Index fell 1.5%.
Markets began falling last week after China announced a surprise devaluation of its currency, the yuan.
The move by the People’s Bank of China has shaken equity markets with commodity stocks coming under intense pressure.
Investors saw it as a sign that the world’s second largest economy could be showing signs of slowing down.
That was followed by more bad news for the markets after a survey showed the manufacturing sector on the Chinese mainland continued to shrink.
The global losses reflect concern over falling oil prices, which have dropped below $40 per barrel of crude – the lowest price since the global economic crisis – as worldwide oil supplies continue to outpace demand.
And the ongoing uncertainty over the timing of the US Federal Reserve’s long-awaited interest rate hike is compounding the problem, experts said.
Some analysts said the market’s dip this week does not necessarily signal that stocks are entering long-term decline.
Indicators in the US economy have been mostly positive in recent months – but some investors have feared that the stock market may have jumped ahead of economic growth.
Many experts say this may be the long-awaited “correction” some market analysts have been looking for.
Some believe it could be an opportunity for some investors to pick up cheap stocks in order to make a profit in the months ahead.
Credit: Sky News
