Fears that the global economy is losing steam have pushed down European stock markets to year-record lows. London’s FTSE 100 share index slid 1.4% on the day to 6,339.97, its lowest level in 12 months.
Wall Street posted its worst weekly performance since May 2012.
Traders say stocks have been hit by the International Monetary Fund’s decision to reduce its global growth forecast for 2014, plus other reports suggesting the Ebola epidemic has the potential to cause tens of billions of dollars in economic damage.
In London, energy and mining shares lost the most points following a steep decline in commodity prices, while fears about the spread of Ebola hit travel and leisure shares.
Germany’s Dax plunged 2.4% to 8,788.81, another 12-month low, while France’s Cac-40 declined by 1.6% to 4,073.71, its lowest level since the beginning of this year.
Very weak economic data coming out of Germany, plus a Eurozone that has posted zero economic growth, are discouraging investors.
Data posted by Destatis showed that German exports in August fell to a 5-year low.
Oil prices continue falling as supplies increase and demand falls.
Brent crude oil fell $1.65 to $88.40 per barrel, hitting a near four-year low, and then later recovered to $89.09.
The West Texas Intermediate dropped $1.92 per barrel to $83.85, its lowest level since June 2012. Later in the day it gained marginally to $89.39.
Since their peak in June 2014, both the Brent crude and West Texas Intermediate have declined by about 20%.
While demand from the world second largest oil consumer, China, has fallen, supplies from Libya have increased.
Despite the stock market slide, investors in the US said European equities could rebound in November and December.
Germany’s weak economic data will add pressure to the European Central Bank (ECB) to make a move into quantitative easing. Whether its within its mandate to do is doubtful, however.
US stocks also fell
In the United States, technology shares took a beating. After Microchip Technology reduced its sales forecast, semiconductor makers slumped, sparking a downward spiral for Texas Instruments, Intel, and Avago Technologies shares. Microchip Technologies’ stock slid 12.3% to $39.96.
The Dow Jones Industrial Average had a yo-yo week, posting its biggest gain of the year on Wednesday, and then its largest decline of the year on Thursday, plunging 334 points.
On Friday, the Dow Jones Industrial Average was 0.7% down to 16,544.10, the S&P’s 500 Index lost 1.2% to 1,906.13, and Nasdaq plunged 2.3% to 4,276.24.
The market volatility came during a week of relatively light news from corporate America. This will change next week, which will be filled with the publications of latest quarterly results.
Most investors are betting on a good set of 3rd quarter figures from US companies, which will hopefully give markets a much-welcomed lift.