Weak US data and debt ceiling concerns stoke market rout

Global stockmarkets have continued to fall after weak data caused worries about US growth.

The major US indices dropped by more than 2 per cent overnight and Japan’s Nikkei 225 index shed 4.2 per cent.

The markets continue to be spooked by the slowdown in emerging markets, while a manufacturing survey in the US knocked confidence about its economic recovery.

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The Institute for Supply Management (ISM) factory index reading for January was 51.3, far lower than the reading of 56.5 seen in December.

While any reading above 50 shows that the industry is expanding, economists had been expecting an expansion of roughly 56 in January.

The problem of US debt also reared its head again yesterday, as US treasury secretary Jack Low called for action on raising the debt ceiling, which is the limit on how much money the US can borrow.

Failure to lift the ceiling could lead to a US default.

European markets have suffered less than the US and Asia this morning, but the FTSE 100 is still down by 0.7 per cent, down by 6 per cent from its peak in January.