Stock markets staged a recovery this afternoon after economic fears continued to weigh on both the FTSE and Wall Street into 2019 after they recorded 10-year lows in 2018.
The FTSE 100 recovered to close 0.04 per cent down after an initial 1.8 per cent fall, and Wall Street also rallied after tumbling as it opened, spooked by global stock market market weakness on the first day of New Year trading.
The Dow Jones lost 350 points as it opened this morning, down 1.5 per cent before rallying to 0.27 per cent down, while the S&P 500 and Nasdaq dropped 1.14 per cent and 0.64 per cent respectively before both rallying to just above 0.14 per cent up.
Tech stock Microsoft and Apple were under pressure, both down 1.3 per cent before partially recovering, while Tesla fell eight per cent after cutting prices of its vehicles by $2,000.
US stocks have suffered in recent weeks amid continued trade tensions between the US and China, and last year was Wall Street’s worst since the 2008 financial crisis. The US federal government also remains shut down amid a tussle between President Donald Trump and his opponents in Congress over funding for his wall at the Mexican border.
Weakness comes in the wake of this morning's news that China’s manufacturing industry contracted for the first time in 19 months, which saw Asian stocks weaken as analysts predicted global slowdowns in 2019.
“Stock markets didn’t get the memo that we’re supposed to start the new year with a positive attitude towards being fit and healthy,” said Russ Mould, investment director at AJ Bell.
“A slowdown in China’s manufacturing sector hurt stocks in Asia and also added to investor concerns about a global economic slowdown in 2019, leading to weakness across European markets.”
The pound was down against the euro and the dollar this afternoon, sliding 1.2 per cent and 1.3 per cent respectively despite a surprise boost for the UK manufacturing sector, which hit a six-month high as companies stockpiled supplies ahead of Brexit.
European markets also suffered, with Eurostoxx down 0.45 per cent. Germany's Dax fell 0.2 per cent before recovering, while French benchmark Cac fell almost two per cent before recovering to 1.12 per cent down this afternoon.
So-called safe haven investments such as gold benefited from the weaknesses. The precious metal hit $1,288.64 a troy ounce today, its highest price since June last year.
US-China trade tensions have seen gold rise more than 10 per cent since the late summer lows, indicating it has not lost its shine as a safe investment.
But the poor start to the year was accompanied by a fall in oil prices, with global benchmark Brent crude fell 0.54 per cent to $53.51 a barrel before recovering this afternoon, while copper edged down 0.3 per cent.