Stock markets plunge amid fears of economic slowdown in China

Stock markets plunge amid fears of economic slowdown in China

-NRN/Reuters

World stock markets plunged yesterday after a near-9 percent dive in China shares and a tumble in oil prices, while U.S. stocks were on track to end the day with steep losses even after a striking comeback in a volatile day.

The Australian share market has closed four per cent lower in its worst performance in more than six years.

At the close yesterday, about 60 billion dollars had been wiped off the benchmark SPASX200 index, 4.09 per cent lower.

After dropping more than 1,000 points, or almost 7 percent, at Wall Street’s open, the Dow Jones industrial average cut losses but was still off almost 4 percent in afternoon trading.

The Standard & Poor’s 500 index was down 4 percent and appeared to be on track for correction territory, or a 10-percent drop from its May record high.

European stocks closed off 5.4 percent after Asian shares slumped to 3-year lows when a three-month-long rout in Chinese equities threatened to get out of hand.

U.S. traders had rushed for the exits in Monday’s first half hour of trading when deepening concerns about a China-led global economic slowdown and tumbling commodities prices followed a 5 percent decline in the S&P and Dow Thursday and Friday.

“Anybody with a pulse was nervous when the market opened. We’re still going to see significant price swings both up and down before the day ends today,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

GREAT FALL OF CHINA

The 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 2015’s gains, which in June stood at more than 50 percent.

Many traders had hoped Beijing would take support measures, such as an interest rate cut, over the weekend after China’s main stocks markets slumped 11 percent last week.

With serious doubts emerging about the likelihood of a U.S. interest rate rise this year, the dollar was down 1.6 percent against other major currencies after falling as much as 2.5 percent earlier in the day.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 5.4 percent to a more than three-year low. Tokyo’s Nikkei ended down 4.6 percent and Australian and Indonesian shares hit two-year troughs.

London’s FTSE 100, with its large number of global miners and oil firms, ended down 4.7 percent for its 10th straight decline – its worst run since 2003.

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Amy Whittaker
Amy Whittaker 1402 posts

Amy joined the NRN team in August 2011, before graduating from a B of Arts (Communication-Journalism)/B of Sports Studies from Charles Sturt University in December 2011.

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