European markets extended losses on Thursday in yet another rocky trading session. The FTSE 100 fell 15.73 to 6,195.91,taking losses since the index’s 14-year high on 4 September to £179bn. Across the Channel, all major European indexes including France, Italy and Spain ended in negative territory.
So what's behind the sell-off?
1. Eurozone: Investors are worried the 18-nation bloc could be slipping back into an economic crisis following a string of disappointing data.
Earlier this week, Germany slashed its growth forecast for this year and 2015. France, the eurozone's second largest economy, has barely grown in three years and has already announced it won't meet its budget deficit target of 3 per cent until 2017.
Furthermore, Paris has indicated it won't commit to further austerity, throwing a challenge to Brussels and Berlin, which have continuously called for tighter budgets. Meanwhile, Italy and Spain, are stuck in a low growth, low inflation and high unemployment environment.
Rome and Madrid have enjoyed a period of stability with bond yields falling to pre-crisis levels but they remain vulnerable to external shocks. On Thursday, Spain failed to hit its 3.5 billion euro target in a bond sale, raising 3.2 billion euro instead.
2. Greece: The stock market took a battering on Wednesday and bond yields have jumped above the 7 per cent threshold-which many analysts believe is unsustainable- in a move reminiscent of the Greek debt crisis at its height.
Investors are also concerned about the future of the Greek government after the anti-bailout Syriza party took the lead in a recent opinion poll, which could ultimately lead to an early election. The sell-off also calls into question Athens' plan to exit its bailout programme a year earlier than expected.
3. Ebola: Aviation stocks have already taken a hit and investors are concerned about the impact of the deadline virus, which has killed more than 4,000 people according to official figures, on commodity prices, in particular cocoa beans.
4. Oil prices: The sudden plunge in the price of Brent crude has sent shockwaves around the world from Russia to Venezuela and Iraq. In fact, Caracas has already called for an emergency OPEC meeting amid speculation that the country is facing a possible default.
5. It's October: Markets don't like October. It marks the anniversary of the Black Monday crash on 19 October, 1987. Across the pond, October brings back bad memories too: the Stock Market Crash of 1929 began in late October and led to the Great Depression.
6. Geopolitical tension: The Ukraine crisis is far from over and Hong Kong is back on the spotlight after footage of a police officer beating an unarmed protester sparked further tensions as demonstrations entered its third week.Reuse content