Financial News

  • 5 February 2014, 9:23

Markets Drop Over Further US Growth Fears

Stocks in Japan have plunged nearly 5%, with the country's key index losing 14% since the beginning of the year.

It was the worst daily drop of 2014 and continues to dent the large gains made last year.

Hong Kong plunged 2.89% on Tuesday while Seoul fell 1.73%. The drops followed significant falls for the top US markets on Monday.

European markets traded mainly flat on Tuesday morning.

The Asian fall was prompted by weaker-than-expected US manufacturing data on Monday.

The Institute for Supply Management said manufacturing grew at a substantially slower pace in January, as new order growth plunged the most in 33 years, driving overall factory activity to an eight-month low.

China's goods-producing sector has also caused concern about growth in the second biggest economy.

Chinese computer giant Lenovo dived 16.4% on fears it was overextending itself, with the purchase last week of Google's struggling Motorola division for $2.91bn (1.78bn).

US shares on the three New York indices shed more than 2% late on Monday, with the tech-heavy Nasdaq losing 2.6%.

Gold prices rose as investors sought havens and US Treasuries saw 10-year yields fall to their lowest since early November.

Meanwhile, Brent crude oil is at a two-week low.

Traders also acted after Treasury Secretary Jacob Lew warned that the US borrowing limit would again be hit on Friday.

Investors are concerned by a renewed fear of a Washington stand-off and the risk of possible default.

Last week, Argentina, India, Turkey and South Africa all saw large impacts amid fears of capital flight to less-risky havens.

That shift was prompted by the US Federal Reserve tapering quantitative easing by $10bn (6bn) for the second month in a row, reducing the monthly figure to $65bn (40bn).

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