US market changes gear as fear over Chinese economy reverberates

Major market indices closed down in the US, the second fall of the week following similar falls in Europe & Asia. The Dow closed down 2.8% at 469 basis points, S&P closed down 2.95% and Nasdaq 2.95% which is probably worst performance since 2011. The news from China led to a broad sell off around the world. In London the FTSE 100, closed on Monday for a public holiday, fell 189.4 points, or 3.03%, to 6,058.54. Germany’s Dax dropped 2.38% to 10,015.57 and France’s Cac closed 2.4% lower at 4541.16. Japan’s Nikkei had earlier closed down a 3.8% and China’s Shanghai composite index suffered a smaller 1.3% loss. The sell off came after more signs of weakness in China's economy. China's manufacturing sector data suggested output slumped to a 3 year low in August. The Chinese economy is adjusting to a new growth model and has seen growth slow down but not sharply and not unexpectedly say Chistine Larguarde the IMF Chief. Speaking in Indonesia,she said said the global economy was weaker than the IMF had expected. And the recent spike in “global risk aversion and financial market volatility” could hurt growth in Asia. She said China could cope with the gear change but added other emerging economies would have to be vigilant in order “to handle potential spillovers from China’s slowdown and tightening of global financial conditions”.