Asian stocks dropped on Thursday following weak global data and continued unrest in Hong Kong, while investors awaited the European Central Bank's policy meeting.
U.S. benchmark indices skidded over 1 percent overnight, posting their worst beginning to October since 2011, after manufacturing activity and construction spending declined in August. In Europe, Markit's final manufacturing Purchasing Managers' Index (PMI)hit a 14-month low with Germany's manufacturing sector contracting for the first time in 15 months.
"The next 30 trading days feels like mid-2012 – just before the 'whatever it takes' rally that drove global markets to record highs. It also feels distinctly like early 2011, when there were jitters around China and the eurozone crisis. The trading reactions in the U.S. markets illustrate that risk assets are living on borrowed time," said Evan Lucas, market strategist at IG.
The European Central Bank (ECB) is widely expected to leave interest rates unchanged at its policy review later today. Attention will be on the bank's plan to purchase asset-backed securities (ABS), first announced last month. Traders expect the ECB to buy a total of 200 billion euros, according to a Reuters poll.