Reblogged from nowtheendbegins.com
Many traders had hoped that such support measures, which could
include an interest rate cut, would have come from Beijing over the
weekend after its main stocks markets slumped 11 percent last week. With
serious doubts also now emerging about the likelihood of a U.S.
interest rate rise this year, the dollar slid against other major
currencies.
As commodity markets took a fresh battering, Brent and U.S. crude oil
futures hit 6-1/2-year lows as concerns about a global supply glut
added to worries over potentially weaker demand from the normally
resource-hungry China.
U.S. crude was last down 3.6 percent at just below $39 a barrel while Brent dropped to $43.74 a barrel to take it under January’s lows for the first time.
With the latest slide rooted in disappointment that Beijing did not announce expected policy support over the weekend, all index futures contracts slumped by their 10 percent daily limit, pointing to more bad days ahead.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 5.1 percent to a three-year low. Tokyo’s Nikkei ended down 4.6 percent and Australian and Indonesian shares hit two-year troughs.
“China could be forced to devalue the yuan even more, should its economy falter, and the equity markets are dealing with the prospect of a weaker yuan amplifying the negative impact from a sluggish Chinese economy,” said Eiji Kinouchi, chief technical analyst at Daiwa Securities in Tokyo.
Just as worrying was evidence that developed markets were becoming synchronized with the troubles. London’s FTSE with its large number of global miners and oil firms, was down for its 10th straight day, its worst run since 2003.
The pan-European FTSEurofirst 300 was last down 5 percent at 1,355 points, wiping around 400 billion euros ($460.16 billion) off the index and taking its losses for the month to more than 1 trillion euros.
U.S. stock futures also pointed to big losses for Wall Street’s main markets, with the S&P 500, Dow Jones Industrial and Nasdaq expected to open down 3.6, 4.0 and 4.9 percent respectively. It is likely to tip the S&P 500 and Nasdaq formally into ‘correction’ territory – meaning stocks, at their lows, are 10 percent off their 52-week highs.
“We are in the midst of a full-blown growth scare,” strategists at JP Morgan Cazenove said in a note.
LONDON – Alarm bells rang across world markets on Monday as a near 9 percent dive in China shares and a sharp drop in the dollar and major commodities panicked investors.
European stocks were more than 5
percent in the red and Wall Street was braced for similar losses after
Asian shares slumped to 3-year lows as a three month-long rout in
Chinese equities threatened to get out of hand.
Down, down, down…..
Oil plunged another 4 percent,
while safe-haven government U.S. an German bonds and the yen and the
euro rallied as widespread fears of a China-led global economic slowdown
and currency war kicked in.
“It is a China driven macro
panic,” said Didier Duret, chief investment officer at ABN Amro.
“Volatility will persist until we see better data there or strong policy
action through forceful monetary easing.”
The Australian dollar fell to six-year lows and many emerging market currencies also plunged, whilst the frantic dash to safety pushed the euro to a 6-1/2-month high above $1.15.
“Things are starting look like the Asian financial crisis in the late 1990s. Speculators are selling assets that seem the most vulnerable,” said Takako Masai, head of research at Shinsei Bank in Tokyo.
12 EVENTS THAT WILL OCCUR IN SEPTEMBER THAT YOU SHOULD KNOW ABOUT
U.S. crude was last down 3.6 percent at just below $39 a barrel while Brent dropped to $43.74 a barrel to take it under January’s lows for the first time.
Copper, seen as a barometer of
global industrial demand, tumbled 2.5 percent, with three-month copper
on the London Metal Exchange also hitting a six-year low of $4,920 a
tonne. Nickel slid 6 percent to its lowest since 2009 too at $9,570 a
tonne.
GREAT FALL OF CHINA
The near 9 percent slump in Chinese stocks was their worst performance since the depths of the global financial crisis in 2007 and wiped out what was left of the 2015 gains, which in June has been more than 50 percent.With the latest slide rooted in disappointment that Beijing did not announce expected policy support over the weekend, all index futures contracts slumped by their 10 percent daily limit, pointing to more bad days ahead.
MSCI’s broadest index of Asia-Pacific shares outside Japan fell 5.1 percent to a three-year low. Tokyo’s Nikkei ended down 4.6 percent and Australian and Indonesian shares hit two-year troughs.
“China could be forced to devalue the yuan even more, should its economy falter, and the equity markets are dealing with the prospect of a weaker yuan amplifying the negative impact from a sluggish Chinese economy,” said Eiji Kinouchi, chief technical analyst at Daiwa Securities in Tokyo.
Just as worrying was evidence that developed markets were becoming synchronized with the troubles. London’s FTSE with its large number of global miners and oil firms, was down for its 10th straight day, its worst run since 2003.
The pan-European FTSEurofirst 300 was last down 5 percent at 1,355 points, wiping around 400 billion euros ($460.16 billion) off the index and taking its losses for the month to more than 1 trillion euros.
U.S. stock futures also pointed to big losses for Wall Street’s main markets, with the S&P 500, Dow Jones Industrial and Nasdaq expected to open down 3.6, 4.0 and 4.9 percent respectively. It is likely to tip the S&P 500 and Nasdaq formally into ‘correction’ territory – meaning stocks, at their lows, are 10 percent off their 52-week highs.
“We are in the midst of a full-blown growth scare,” strategists at JP Morgan Cazenove said in a note. source
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