LONDON – Stock markets around the world took a battering Thursday as traders tracked a big-down day on Wall Street. Pessimism over the global economy in light of super-low oil prices and worries over China has jolted investors all year. Renault shares were in particular trouble, dropping by about a fifth at one stage, after French anti-fraud units conducted raids on the carmaker that unions are reportedly linking to the Volkswagen emissions scandal.
KEEPING SCORE: In Europe, France's CAC 40 slid 2.6 percent to 4,284 while Germany's DAX dropped 2.3 percent to 9,729. The FTSE 100 index of leading British shares was 1.5 percent lower at 5,869. Earlier, they had been down even more but hopes of a steady opening on Wall Street following Wednesday's slide have helped steady the ship — Dow futures and the broader S&P 500 futures were up 0.4 percent.
CORRECTION OR CRASH? A correction in financial markets is normal. After all, investors always want to book profits they had made. A correction becomes a crash when the selling is not particularly linked to anything at all, when it's just motivated by fear. For some market-watchers, the behavior in markets is beginning to resemble that scenario, especially on Wednesday when the Dow Jones index in New York closed 365 points lower.
ANALYST TAKE: "The issue here is that before long people will forget why they are selling, but continue to sell simply due to the fear factor," said Joshua Mahony, Market Analyst at IG. "Yesterday felt like the beginning of that."
OIL IS KEY: There are a number of factors that are prompting investors around the world to take fright, including the sustained weakness in the price of oil. Though high supply is one reason, worries over the demand outlook have dented oil prices too. Overnight, the barrel of benchmark New York crude fell below $30 a barrel for the first time since late 2003. It's since clawed back some ground to trade at 1.4 percent higher at $30.89 a barrel. Meanwhile, the international Brent standard traded in London, was up 1.9 percent at $30.87.
THE QUOTE: "Whether we like it or not, it appears as though crude oil is currently driving almost everything at the moment," said Fawad Razaqzada, technical analyst at Forex.com.
RENAULT REVERSE: Shares in the French carmaker were down around 14 percent after the reported raid. French media reported that the CGT Renault union revealed raids on multiple sites focusing on engine monitoring that suggested a link to Volkswagen, the German car giant embroiled in an emissions scandal in the U.S.
ASIA'S DAY: Japan's benchmark Nikkei 225 dived 2.7 percent to close at 17,240.95. South Korea's Kospi was down 0.9 percent at 1,900.01. Hong Kong's Hang Seng lost 0.6 percent to 19,817.41, but the Shanghai Composite rebounded nearly 2.0 percent to 3,007.65.
CURRENCIES: Dovetailing the calm opening on Wall Street, the mood was steadier in foreign exchange markets where the euro was trading 0.2 percent higher at $1.0891 and the dollar was 0.1 percent ahead at 117.78 yen.