Global shares drop as anxiety returns

Published:  24 Apr at 6 PM

As reported by the BBC, stock markets have dropped after weak manufacturing figures and political uncertainty in the Netherlands and France hit investor confidence. German shares dropped 3.4%, French stocks fell by 2.8%, UK stocks slid down 1.9%, while Wall Street fell 0.8%.

Last Sunday, President Nicolas Sarkozy lost narrowly to socialist opponent Francois Hollande during France's first round of presidential elections. The failure of budget talks in Holland added to market nerves.

The closely-observed Purchasing Managers Index (PMI) suggested that manufacturing activity in Germany dropped to a three-year low of 46.3 for April. Any figure under 50 suggests a contraction.

Data for the wider economy, both for Germany, France and the rest of the eurozone, also indicated a deeper contraction.

Chris Williamson, who is chief economist at data-compiler Markit, said that the flash PMI indicated a faster rate of market contraction in the EU during April, expanding what seems to be a third consecutive quarter of double-dip recession.

The PMI reading for China, simulated by HSBC, improved slightly from 48.3 in February to 49.1 in March to.

To further compound the gloomy confidence of investors, the Bank of Spain predicted that Spain’s economy contracted by 0.4% during the first three months of 2012, pushing the country’s economy back into recession following its 0.3% contraction in 2011’s final quarter.