LONDON (The Deal) -- The global stock market rout persisted on Thursday, with European and Asian indices down, after the Federal Reserve taper decision Wednesday conspired with a weak reading from a gauge of Chinese manufacturing to feed fears about an emerging markets meltdown.
The Fed on Wednesday cut its monthly bond buying program by $10 billion to $65 billion, in line with expectations, with Chairman Ben Bernanke making generally upbeat comments about the U.S. economy in his final statement as boss of the central bank.
On Thursday in China, the HSBC Bank and Markit Economics Purchasing Managers' index slowed in January for the first time in six months to 49.5, slightly less than a preliminary estimate and down from 50.5 in December. HSBC attributed the slowdown to both weaker export orders and slower domestic business.
But in Germany, government figures showed that unemployment fell far more than expected in January, declining 28,000 compared with a forecast decrease of 5,000. The unemployment rate held firm at 6.8%. Separately, an index of eurozone economic sentiment in January came in just short of forecasts.
By mid-morning in Europe, the FTSE was down 0.33% at 6,522.98, the DAX had lost 0.32% to 9,306.96, and the CAC 40 had tumbled 0.43% to 4,139.05.
China is preparing to start a fortnight of festivities to celebrate the lunar New Year, which begins Friday, but recent corporate results have showed a government clampdown on excessive consumption and gift-giving within state-backed enterprises and public agencies is bringing unhappiness to Western consumer goods makers.
On Thursday, Treasury Wine Estates lost a fifth of its market value in Sydney trading after the Australian company warned profit in the first half could fall by 40% or more, partly because of Chinese austerity measures. It said it won't be able to claw back the profit shortfall in the second half, and has therefore lowered its full-year guidance to A$190million to A$210 million ($165.9 million to $183.5 million) from a forecast A$230 million to A$250 million previously.
Meanwhile in London, spirits maker Diageo
(DEO)DEO declined after posting first-half earnings that fell short of expectations. It cited weak sales of Chinese white spirits, or baijiu, as a factor that had suppressed emerging markets growth. Net sales of that liquor plummeted 66%.
In Sweden wireless network equipment maker Ericsson
(ERIC)ERIC rose after fourth-quarter profit exceeded expectations and CEO Hans Vestberg rebuffed talk he may quit to take the helm at Microsoft.
And in Frankfurt, chipmaker Infineon Technologies led the gainers on the DAX after issuing a second-quarter sales growth projection that was more optimistic than analysts' own numbers.
In Hong Kong, PC maker Lenovo Group ended the last session before the Chinese New Year break down more than 8% after announcing its second big-ticket purchase from a U.S. technology company within a week. Lenovo is to pay $2.91 billion for Google's
(GOOG)GOOG Motorola Mobility unit to gain hardware for smartphones. The deal unwinds part of Google's $12.4 billion acquisition of Motorola Mobility in 2012 but the Mountain View, Calif. company gets to keep most of the all-important patents. For Lenovo, the acquisition comes just after it agreed to pay $2.3 billion for the low-power server business of International Business Machines and breaks its own week-old record for a Chinese technology deal.
In Tokyo, the Nikkei 225 plummeted 2.45% to 15,007.06. In
Hong Kong, the Hang Seng closed down 0.48% at 22,035.42.
Hong Kong trading takes a break for new year festivities on Friday and Monday.
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts