Volkswagen Share Price Slide and China Worries Roil Markets
Sep 27 2015
China's preliminary purchasing managers' index sank to the lowest level since March 2009, prompting falls in Asian and emerging-market stocks.
"Draghi... (reaffirmed) the ECB would take the "necessary" steps to enhance monetary stimulus in the face of the worldwide economic risks now threatening the region's recovery", Spreadex analyst Connor Campbell said, noting the guardedly positive economic outlook allowed European bourses to hold "onto their morning gains with remarkable vigour as Wednesday continued". The Shanghai Composite Index in mainland China was up 0.9 percent to 3,185.62.
The country has suffered a slew of weak data, from trade and investment to consumer spending and inflation, despite authorities cutting interest rates five times since November.
Futures on the Standard & Poor's 500 Index dropped 0.8 per cent while Singapore-traded contracts on Japan's Nikkei 225 Stock Average were down 3.1 per cent from Friday's close. "The low trading volumes are more related to sentiment and fear of unexpected swings in the market than any other fundamental factors". Australia's benchmark S&P/ASX 200 index was also down 2.07 percent.
Seoul lost 1.89 percent and Taipei closed more than two percent down. "The clock is ticking for the Fed to lift rates but the weakening data we're seeing in China justifies the cautionary approach from the Fed".
he euro slipped to 0.3 percent to $1.1156 while the dollar fell 0.5 percent to 119.91 yen.
"After that initial correction [in the morning], the market remained relatively stable for the rest of the day", said Gerry Alfonso, a director of Shenwan Hongyuan Securities.
A plunge in China's stock market over the summer and a surprise devaluation in the yuan have roiled global markets, and raised doubts inside and outside China over Beijing's ability to manage the world's second-largest economy.
Volkswagen AG was in the spotlight again after the company said a scandal over falsified USA vehicle emission tests could affect 11 million of its cars around the globe as investigations of its diesel models multiplied, heaping fresh pressure on CEO Martin Winterkorn. The yen has been stuck in a narrow trading range over the past week and last stood little changed at 120.00 to the dollar.
Adding to market woes is the uncertainty in global financial markets caused by the Federal Reserve's decision not to raise benchmark interest rates. Some investors were taking advantage of recent share price falls and finding value in somestocks. Brent crude oil prices inched towards $50 a barrel after data showed a decline in United States stockpiles last week.
The Shenzhen Component Index rose 1.04 percent to close at 10,238.04 points, Xinhua news agency reported.