Global economy woes hit markets

Global economy woes hit markets

Global economy woes hit markets

Written by Staff Writer

21 Aug, 2015 | 9:10 am

Shares around the world have seen further falls, sparked by renewed fears over the health of the global economy. In China, the authorities intervened again on the stock market to little effect. Shares in Shanghai fell 3.4%.

And expectations of a US interest rate rise dimmed after the Federal Reserve said the economy was not ready yet.

In the US, the Dow Jones closed down more than 2%, while markets in Paris and Frankfurt also fell more than 2%. The UK’s FTSE 100 closed down 0.56%.

Oil prices had a mixed day. After dropping at first – adding to steep falls seen on Wednesday – US crude recovered to stand up 20 cents at $41.47 a barrel, although Brent crude was down 54 cents at $46.62.

Markets have become increasingly nervous over prospects for the global economy, especially with signs that the Chinese economy is slowing.

The devaluation of China’s currency, the yuan, last week took many by surprise, and the Chinese stock market has continued to see big fluctuations despite efforts by Beijing to calm markets.

The Federal Reserve’s key interest rate has been kept near zero since December 2008, although there has been speculation that the Fed will raise rates at its meeting in September.

There was also concern that inflation would remain weak because of the strong dollar and falling commodity prices, which act as a double depressant on imports.

Although oil prices appeared to stabilise on Thursday, they had fallen sharply on Wednesday following the release of data showing that US oil stockpiles were higher than expected. The price of oil has more than halved over the past year, due to a combination of increased supplies and slowing demand.

The low oil prices are creating pressures on economies that are dependent on oil revenues.

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