Global Markets Crushed: Enters Correction After Biggest Selloff in Four Years.The intense selloff on Wall Street forced the Dow and S&P to shed almost 6% for the week, with the Nasdaq declining nearly 7% for the week, as traders across the globe worried about sustained weakness in China. A report on Chinese manufacturing showed activity shrank at the fastest pace in 6-1/2 years – evidence that the world’s second-largest economy could be in for a sudden slowdown.“The dismal manufacturing figures from China leaves the door open for more devaluing of the yuan.
Stocks had already fallen sharply in Europe, Asia and Australia, while the selloff is China centric to an extent, there are also a lot of other factors weighing on sentiment.
"Very few investors see this pullback coming to a sharp conclusion anytime soon"
Not Limited to Equities: The selling wasn’t just limited to equities on Friday.The recent rout in commodity markets continued Friday as fears over waning Chinese demand intensified. Crude oil prices plunged again to fresh 6-1/2 year lows extending their declines to ten-straight weeks. U.S. prices dropped 2.11% to $40.32 a barrel. Brent, the international declined 2.49% to $45.26 a barrel.
Stock prices around the world continued to plunge on Friday, threatening to end one of the longest bull runs in the history of the stock markets .Sell-offs in the financial markets need not cause harm in the real economy. Still, fear in financial markets can feed on itself. And the declines in the markets are coming not only as China struggles, but also as the Federal Reserve is winding down its huge stimulus efforts. Trillions of dollars of cheap money from the Fed has fueled economic growth and helped push markets higher around the world. Now, the question is whether the world can stay on the recovery path without the Fed’s largess.