Stocks slide even lower

Global equity markets have gone from bad to worse this afternoon, and there is no sign of an end to the selling wave.

The two biggest movers of equity markets over the past few years have been China and the US Federal Reserve, and both have had a negative impact on stocks over the past 24 hours. Yesterday evening, the Fed hinted it may taper its quantitative easing programme in the next three-to-nine months. Traders have become accustomed to the support that the US central bank has been providing, and the prospect that the Fed could reduce its scheme sent investors running for the hills.

Fears that China is slowing down were confirmed last night, when the HSBC survey of manufacturing in the country showed that the sector contracted for the second month in a row. The mining sector has the largest weighting in the FTSE 100 index, and mining stocks are down nearly 5% due to weaker metal prices.

In the US, the Dow is down 1.5%. Stronger-than-expected existing homes sales, combined with a large jump in the Philadelphia manufacturing index, have stoked fears that the Fed will reduce its stimulus package.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.