China’s Shanghai Composite Index plummeted more than 9% during the session Monday, and closed down 8.5% pushing equity markets in Asia to give up their 2015 gains. Hong Kong’s Hang Seng tumbled 5.17%, while Japan’s Nikkei dropped 4.61%. So how will this affect our Markets?
One session after the Dow officially entered correction territory, Wall Street appeared set to extend a selloff in global equity markets as worries about significant deterioration in China sparked fear in the minds of investors around the world. The concern comes as traders wonder what the next shoe to drop is from Chinese officials to stem the bleeding. The world’s second-largest economy moved two weeks ago to devalue its currency, the yuan, on the heels of continued weakness in its economic data.
As the carnage spread from China, European equity markets didn’t fare much better. The Euro Stoxx 50, which tracks large-cap companies in the eurozone, declined 3.73%, plunging further into correction territory after notching its worst week in four years last week. The German Dax shed 3.53%, while the French CAC 40 sank 3.87%, and the UK’s FTSE 100 dropped 3.44 %.
McCaig pointed out that August is typically known as a quiet month for action in the equity markets as investors seek relaxation amid summer’s last days. However, this year is an exception to the rule.
Commodity markets couldn’t escape the bloodletting as crude prices sank to fresh six-year lows. U.S. crude dropped 3.46% to $39.04, while Brent, the international benchmark declined 3.65% to $43.80 a barrel.
Gold dipped 0.20% to $1,157 a troy ounce as it tried to hang on to a seven-week high, while silver dropped 2.50% to $14.96. Meanwhile, aluminum and copper hit their lowest levels since 2009.
In a flight to safety, traders snapped up 10-year U.S. Treasury bonds. The yield fell 0.090 percentage point to 1.960%, the lowest level since April.
In currencies, meanwhile, the euro jumped 0.89% against the U.S. dollar, while the greenback gained 0.24% against the Chinese yuan.
I read on FoxBusiness.com last night that their writers are reporting that the American market will rebound this week. Given the instability in the world. I feel that a larger correction is still in progress and we have not seen the bottom of the market correction yet.