‘The economic outlook is stressing investors to a great degree and sentiment is likely to remain extremely fragile,’ analyst saysNEW YORK — Global stock markets tumbled Friday amid fears the U.S. may be heading back into recession and Europe’s debt crisis is worsening.
The sell-off follows the biggest one-day points decline on Wall Street since the 2008 financial crisis.
Oil extended sharp losses to fall below $84 a barrel amid expectations a slowing global economy will undermine demand for crude.
In Europe, major markets fell, adding to losses Thursday.
By about 7:12 a.m. ET, London’s FTSE 100 had declined 2.28 percent to 5,269.93, according to a report on BBC News. Germany’s DAX had shed 2.18 percent to 6,275.10 while France’s CAC-40 had lost 0.64 percent to 3,299.12.
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Japan’s Nikkei 225 stock average closed down 3.72 percent at 9,299.88 and Hong Kong’s Hang Seng dived 4.29 percent to 20,946.14. China’s Shanghai Composite Index lost 2.13 percent to 2,627.08.
“Losses today have been indiscriminate,” said IG Markets strategist Ben Potter in a report. “The big question on everyone’s mind is what will happen across European and U.S. markets tonight and will there be any form of emergency policy response?”
The Dow closed Thursday down 512.76 points , at 11,383.68. It was the steepest point decline since Dec. 1, 2008.
Thursday’s decline was the ninth-worst by points for the Dow. In percentage terms, the decline of 4.3 percent does not rank among the worst. On Black Monday in 1987, for example, the Dow fell 22 percent.
“The economic outlook is stressing investors to a great degree and sentiment is likely to remain extremely fragile,” Keith Bowman, equity analyst at Hargreaves Lansdown, told Reuters.
“The U.S. economy has been slowing and is moving into a phase where we are going to see spending cuts enforced,” he added. “Investors are concerned as to where future growth will come from with this backdrop of debt for so many governments.”
Automobile shares bore the brunt of the sell-off in Europe on concerns about weaker sales for vehicles, Reuters reported. The sector index fell 4.6 percent.
“Equity valuations are already pretty low but sentiment keeps deteriorating, so why come in and buy now?” said Shane Oliver, head of investment strategy at Sydney-based AMP Capital, which has more than $100 billion in assets under management.