The Markets

European Shares Track Falls In Asia and US
Stock markets across Europe have opened lower, following sharp falls in Asia and on Wall Street.

Investors have been rattled by weak factory data from both the US and China – the world’s two biggest economies.

On Monday, the main US stock indexes fell by more than 2%, and Japan’s Nikkei dived 4.2% on Tuesday.

In Europe, the UK’s FTSE 100 index opened down 0.5%, Germany’s Dax index dropped 0.7% and France’s Cac 40 fell 0.2%.

‘General slowdown’
On Monday, a report from the Institute for Supply Management (ISM), a trade group of purchasing managers, suggested that the US manufacturing sector had barely grown last month.

The ISM’s index of manufacturing activity fell to 51.3 in January from 56.5 in December.

It was the lowest reading since May, triggering concerns that the US economy might be starting to weaken.

Meanwhile, official data released over the weekend showed that China’s manufacturing activity hit a five-month low in January.

“The data was very weak across the board – it’s hard to find any good news in there. It looks like a general slowdown,” said Paul Zemsky, head of asset allocation at ING Investment Management.

“Combine that with the fact emerging market currencies continue to sell off, and things don’t look too good for the market now.”

‘Reset expectations’
Fears of a slowdown in the US economic recovery were fanned further by a fall in car sales – which dropped 3% in January from a year ago.

General Motors saw its sales tumble 12% in January, while Ford’s deliveries dropped 7%.

The decline led to shares in both car makers falling by more than 2% on Monday.

“Investors had expectations going into 2014 of a much stronger US economic recovery than actually what we’re seeing and we’ve had to reset our expectations,” said Chris Gaffney, a senior market strategist at EverBank.

At the same time, many analysts have predicted that global markets are due for a correction, not least because of the sharp rise that has been seen over the past few months.

“This is the beginning of the correction that we have been waiting for,” said Peter Cardillo, chief market economist at Rockwell Global Capital.

Source; BBC