BRUSSELS — Stocks picked up Monday where they left off last week, with key indexes falling and emerging markets losing more ground amid fears of capital flight.
Markets slumped across Europe and the Asia-Pacific region, with the Japanese benchmark Nikkei 225 dropping 2.5 percent to its lowest close since November. The London benchmark FTSE 100 index slid 3.3 percent as Vodafone Group shares tumbled 4.5 percent after AT&T announced that it would not make an offer for the British cellphone giant.
Wall Street was mixed on Monday afternoon after its worst week since June 2012, with investors focused on corporate earnings from big names such as Apple.
“We’re clearly favoring the developed world over emerging markets at the moment,” said Philippe Gijsels, the head of research at BNP Paribas Fortis Global Markets. Investors had become cautious amid signs that some countries, including India, South Africa and Turkey, were having trouble.
“But what’s basically happening is that markets were overbought and they’re looking for an excuse to sell,” Gijsels said. “I don’t think this changes the overall story, I think this will probably create an opportunity to buy.”
After a broad decline in the value of the lira in recent days, Turkey’s central bank said Monday that its monetary policy committee would hold an emergency meeting Tuesday “to take the necessary policy measures for price stability.” It said its decision would be announced at midnight. The currency rebounded after the announcement.
Investors, fretting about slowing growth in China and the prospect that the Federal Reserve would continue to scale back its support of the U.S. economy, bailed out of emerging market currencies, with the Malaysian ringgit and Philippine peso both falling to levels last seen in 2010.
Investors in Japan were reacting to the additional concern of a stronger yen, which they fear may eat into earnings of Japanese exporters as it makes goods more expensive for customers overseas and less competitive globally.
The Japanese currency, which tends to rise in times of uncertainty because it is considered a relatively safe asset, has climbed sharply against the U.S. dollar over the past few trading sessions. On Monday, it was trading at about 102.61 yen per dollar, compared with 104.71 yen per dollar on Thursday morning. Data released Monday showed that Japan’s trade deficit last year surged to 11.47 trillion yen, a record, as the country stepped up oil and gas purchases after the March 2011 earthquake.
The global sell-off started to gather pace Thursday after weak data from the Chinese manufacturing sector reinforced concerns about the strength of the Chinese economy. Although China is still delivering robust growth — many analysts believe its economy will manage to expand more than 7 percent this year — its expansion is far less energetic than it once was, and is overshadowed by considerable risks and uncertainties as the authorities in Beijing seek to engineer a far-reaching shift in the economy.