World markets are back in sell-off mode, as a six percent slump in Chinese shares following more weak data there and a slide back below $30 a barrel in oil sees the recent global rout resume. David Pollard reports.
A rout in stocks is nothing new, of course. But a sense of a vicious cycle setting in is (new). As oil prices slump, so too do oil stocks, dragging down indices and confidence. Oil the common denominator across many concerns. Rabobank strategist Jane Foley. SOUNDBITE (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: There is some evidence now in some countries that the longer oil prices remain low, the more inflation expectations over the longer-term are being pushed lower, and that is beginning to affect wage deals and this a circle of bad news because if wage inflation doesn't pick up, then demand may not pick up and growth and inflation may not pick up. Nagged by its own economy, China again took the brunt. Shares slumped more than six percent to a 14-month low. OPEC and Russian officials have stepped up talk of action to remedy the oil supply glut. But Saudi Arabia - OPEC's biggest producer - has if anything signalled 'no change' to a high output policy. Its national oil giant Aramco told a conference in Riyadh there'd no scaling back on investment in production. Market volatility here to stay then - according to Matthew Beesley of Henderson Global Investors. Central bankers the only prospect for relief ... SOUNDBITE: Henderson Global Investors, Head of Global Equities, Matthew Beesley (English): Investors look not just to Europe, but also to Japan, where governor Kuroda has the potential to increase the amount of stimulus in that economy, we are still in a world where investors can take great comfort and indeed do take comfort from central banks showing supportive action during these times of stress. Japan's Nikkei fell 2.4 percent and Hong Kong's Hang Seng lost almost that - Europe also opening in the red. With a new worry edging into vision - over what the US Fed might do or say as it began its latest two-day policy meeting.