Fresh evidence of a slowdown in the US economy has added to the jittery mood of global stock markets and sent share prices tumbling on both sides of the Atlantic.
Trading on Wall Street opened sharply lower on Wednesday after a survey conducted by Markit showed activity in America’s service sector growing at its weakest rate for 27 months.
The report added to gloom about the world’s biggest economy, raising renewed concerns over the wisdom of the increase in interest rates announced by the Federal Reserve, the US central bank, in December.
After falling more than 200 points on Monday, the Dow Jones industrial average shed more than 150 points in the first hour of business and fell below the 16,000 level.
In the City, the FTSE 100 had been having a quiet day until the release of the US service sector report, but then dropped alongside the Dow and was more than 100 points lower by mid-afternoon.
Markit said the new year had started in the US with a further slowdown in output and new business growth. Its index of service sector activity declined from 54.3 in December to 53.2 in January, the lowest level since late 2013.
Dennis de Jong, the managing director at UFX.com, said: “Janet Yellen may have signalled that the US economy is strong by raising interest rates, yet an ever-strengthening dollar has hit durable goods orders, GDP and other key data points.”
