Chinese manufacturing slowdown hits global markets.
After having reached a new 12-year high earlier in the week, the FTSE 100 has suffered this morning due to a knock-on effect from Japan's Nikkei stock exchange, which fell more than 7% overnight.
Investors looking at the Japanese market over the last few months would have noticed a precarious bubble forming, one that might pop at any time -- and it looks like it has now.
Mid-November saw the Nikkei closing at around 8,700 points... but since then, it had risen dramatically to 15,700 in just six months. However, yesterday's trading saw the index finish 7.3% down following disappointing economic data from China.
The news centred on China's factory activity, which shrank for the first time in seven months. As expected, the heavy loss in Japan is causing ripples in other major markets.
Yesterday, the FTSE 100 saw its second-highest close at 6840.3 points, beaten only by December 1999's 6930.2 figure that was fuelled by the dotcom boom. But in early trade, following the news from Japan, the UK's premier index plunged 133 points, almost 2%, to 6,707.
Here at the Motley Fool, we try to avoid predicting what the stock market is going to do next, preferring to focus on the underlying business of the companies we invest in. We tend to invest without worrying about short-term price movements or wider market sentiment.
While many blue-chip shares have been trading at new highs in recent weeks, today's news saw every single share in the FTSE 100 fall this morning, with the likes of ARM Holdings among the worst hit, currently down 6%.
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> Sam does not own shares in any of the companies mentioned.