US stock markets all fell on Monday, ending the worst August in three years as investors worldwide continued to fret over China’s economy and the timing of the first increase in US interest rates in a decade.
The Dow Jones industrial average fell 114 points, or 0.7%, to 16,528.
The S&P 500 fell 16 points, or 0.8%, to 1,972. The Nasdaq composite slid 52 points, or 1.1%, to 4,776.
The falls came as investors reacted to similar dips in Asia and comments from the Federal Reserve vice-chairman, Stanley Fischer, over the weekend that suggested a rate increase could come sooner than some expected.
In China, where a journalist from one of China’s leading financial magazines “confessed” on state television that his articles triggered the recent stock market chaos, the Shanghai Composite Index closed 0.8% lower on Monday. It has fallen 12.5% this month, the third straight month of declines. Japan’s Nikkei index fell 1.3% on Monday to finish its worst monthly performance since January 2014.
European markets too appeared to be heading for another down day. Markets in Germany and France were down. The UK’s FTSE 100 was closed for a public holiday.
It was a lacklustre start to a critical week as the Fed considers its first interest rate rise since the recession. On Friday the Labor Department will release July’s non-farm payroll jobs report. Economists are forecasting that the economy added about 200,000 new jobs over the month. More good news on the jobs front will add pressure for a rate rise at September’s Fed meeting.
The stock market gyrations of the past few weeks had led some to speculate that the Fed may delay raising rates this year. But at an annual conference for central bankers in Jackson Hole, Wyoming, on Saturday, Fischer said inflationary pressures were mounting and there was a “pretty strong case” for a rates rise.
In a note to investors on Monday, Barclays strategist Krishna Goradia said the comments had “likely led to markets pricing a higher probability (now 32%) of a Fed move next month”.
Volatility in the stock markets has come even as US economic news has remained broadly positive. Last week the Commerce Department said the US economy grew at an annualised rate of 3.7% in the second quarter, ahead of forecasts. Low oil prices, a recovering housing market and good jobs growth all contributed to stronger consumer spending.
This article was written by Dominic Rushe, for theguardian.com on Monday 31st August 2015 21.29 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010