The biggest rout in Chinese shares in eight years stoked concerns yesterday over slowing growth in the world’s No. 2 economy, knocking down global equities and the prices of key commodities.

The dollar eased on safety bidding for other major currencies. The euro topped $1.11 for the first time in two weeks, boosted further by strong German business sentiment data.

Wall Street was down on worries over China’s slowing growth, crystallized by a stunning 8.5 per cent fall in shares in Shanghai that also rattled equity markets in Europe and Asia.

China’s top securities regulator quickly said the government would continue to buy shares to stabilise the stock market as an unprecedented rescue plan already in place appeared to be sputtering.

The Dow Jones industrial average was down 123.2 points, or 0.7 per cent, to 17,445.33, the S&P 500 fell 9.71 points, or 0.47 per cent, to 2,069.94 and the Nasdaq Composite gave up 40.79 points, or 0.8 per cent, to 5,047.84.

Eight of the 10 major S&P 500 sectors were lower.

Share indices in Frankfurt and Paris tumbled more than 2.5 per cent , while London’s FTSE 100 ended down 1.13 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.7 per cent.

Traders and investors said the declines largely came on concerns over sluggish global economic growth triggered by the Chinese equity slump. Both copper, for which Chinese demand is an important driver, and the broader Thomson Reuters CRB commodities index hit their lowest levels in six years. Copper futures fell another 1 per cent on yesterday.

Oil was near four-month lows after the Chinese stock crash fueled worries the world’s biggest energy consumer may cut back and as more evidence emerged of a global crude supply glut.

Brent crude fell 91 cents to $53.69 a barrel, after touching its lowest in almost four months, adding to falls which are expected to put more downward pressure on global inflation.

Despite the still-patchy economic news, many analysts still expect US Federal Reserve policymakers meeting this week to raise interest rates in September.

Expectations of a rate hike have slowly pushed up US Treasury yields and widened the dollar’s premium over the euro. But the euro has also tended to rise when investors get more concerned about global growth and rein in riskier bets, as they were doing yesterday.

The common currency pared some of its early gains from a bullish Ifo survey of German business sentiment to stand up 1.2 per cent on the day at $1.1112. A dollar index was down 0.80 per cent, while the greenback was down 0.5 per cent versus the yen.

“Dollar weakness against the euro and the yen is a risk-aversion story reflecting China stocks,” said currency strategist Richard Franulovich at Westpac in New York.

US Treasury prices got a lift from international investors seeking shelter from tumbling stocks. The 10-year note was last up 11/32 and yielding 2.2337 per cent.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.