European markets were relatively flat at mid-morning on 2 September, the most neutral start to the trading day since the Chinese stock market collapsed on 24 August. The FTSE 100 dived to 6,022.32 points, but climbed up to almost recover its losses after purchasing managers' index data from Markit suggested the UK manufacturing industry picked up in August.
The index showed activity in the market grew more than it did in July of this year, scoring 57.3 in August and 57.1 the month before, although Markit analysts said construction companies were still recovering. Michael van Dulken, head of research at Accendo Markets, said UK investors were relatively bullish, adding: "Uncertainty still rife regarding global growth following mixed US and Chinese manufacturing reads and Canadian and Aussie GDP misses, all the while markets debate whether the US Fed will break the seal this month and raise interest."
In the early morning, markets in Europe fell more steeply, with the German DAX and France's CAC 40 both falling by more than 0.25%. The bearish opening call came after IMF head Christine Lagarde spoke at a conference in Jakarta, stating other countries – because of global dependence, the stock market crash in China and underlying problems with China's economy – could suffer financially.
The IMF chief showed concern regarding the impact of the crash after markets worldwide lost significantly in response to Black Monday, when the Shanghai Composite in China plummeted by 8%.
Van Dulken noted that: "Lagarde [is] warning about financial market volatility and risks spilling over from one economy to the next (China rebalancing, US rates rises, Japanese growth slowing and commodity price falls all represent headwinds). Goldman Sachs stays positive on China and Morgan Stanley issues its first 'full-house buy alert' on international equities since correctly doing so in early 2009, suggesting the worst of the summer rout may be over for global equities."
On 1 September, the Dow Jones Industrial average fell by 2.8% as investors worried about the contraction of Chinese manufacturing activity. The Shanghai composite was down 0.2% on 2 September.