Global stock markets drop on concerns over US economy

The FTSE 100 index opened 2.3% lower, the Euronext 100 declined by 3.5% and Nikkei 225 slipped 12.4% or 4,451 points

Stock markets across Europe and Asia dropped on Monday, spooked by concerns that the US economy is heading for a slowdown.

In London, the FTSE 100 index opened 2.3% lower while the Euronext 100 declined by 3.5%.

They followed sharp declines across Asia with Japan's Nikkei 225 slipping 12.4% or 4,451 points in the biggest decline by points in history.

It follows weak jobs data in the US on Friday which triggered concerns about the country’s economy.

Meanwhile, the yen has been firming against the US dollar since the Bank of Japan hiked interest rates last week, making stocks in Tokyo more expensive for foreign investors.

Stock markets in Taiwan, South Korea, India, Australia, Hong Kong and Shanghai all declined.

A series of weaker-than-expected economic data from the US has fuelled speculation that the country is slowing.

At the same time, the US Fed held off reducing interest rates last week in contrast to other central banks such as the Bank of England, while major American companies such as Amazon and Intel reported disappointing financial results.

Official employment data showed that US employers added 114,000 jobs in July, far fewer than expected while the unemployment rate ticked up.

Shanti Kelemen, CIO at M&G Wealth, told the BBC's Today programme: There are just some signs that potentially the market is slowing down a bit.

I think that also spooked some people on Friday and you are also seeing the Japanese market was already shut when that happened so you are seeing Japan react to those things that happen last week, Kelemen said.

Nevertheless, Kei Okamura, a Tokyo-based portfolio manager at Neuberger Berman, said that in Asia the selloff was instigated by the sharp appreciation of the yen as global investors turned cautious on Japanese corporate earnings, especially that of exporters like automakers.