Global Market Decline: Financial Stocks and Manufacturing Data Take a Toll

Global equity markets saw a significant downturn, influenced by disappointing U.S. manufacturing data and a major decline in European financial stocks. Treasury yields fell, and oil futures gave up earlier gains. Both the Federal Reserve and the Bank of England signaled caution but leaned towards potential rate cuts in the future.

Global equity markets sank lower on Thursday, driven by lackluster U.S. manufacturing data and a severe downturn in European financial stocks, marking their biggest one-day slump since March 2023. Treasury yields also dropped, impacted by the weak economic indicators, a rate cut in the UK, and anticipated policy easing in the U.S.

MSCI's global stock gauge slid 1.37%, oil futures retracted earlier gains, and concerns over a broader Middle East crisis seemed to have minimal impact on supply. Following its steady interest rate hold on Wednesday, the Federal Reserve hinted at a potential September rate cut, while the Bank of England preemptively reduced borrowing costs by a quarter-point.

On Wall Street, the major indexes took a steep dive: the Dow Jones fell 553.80 points, the S&P 500 dropped 76.79 points, and the Nasdaq plummeted 388.86 points. Disappointing earnings and industrial growth forecasts signal challenging times ahead, while the UK's cautious pace in interest rate cuts suggests a gradual economic strategy.

(With inputs from agencies.)