All eyes in financial markets will be on China today after a bloodbath across the globe that saw trillions of dollars in value blown up.
Trading in Chinese markets gets underway around 11.15 am Sydney time, but our market is due to start more than 3% lower.
Shares sold off, commodities fell, led by iron ore, and oil, bonds soared in Europe and the US, while currencies saw the euro again firm, with the US dollar rising against a host of commodity-based currencies, from the Aussie dollar to the NZ currency and their Canadian counterpart.
Investors will be looking to see if there is a repeat of yesterday’s 8.5% plunge on the key Shanghai market, or whether the Chinese government manages to conjure up some new support policies to ease the selling pressures.
The wild swings in China, especially the 8.5% slide in the value of the Shanghai market triggered an intensification of the global rout on markets after a weak start in markets in Australia and Japan.
The overnight futures market has the ASX 200 on the brink of a 3% plus (more than 180 points) fall on top of yesterday’s 4.3% plunge (213 points) and the 2.7% slide last week.
That was after the US market swung wildly during a rough day of trading in New York.
The Dow ended the day down 588.47 points, or 3.6%, at 15,871.28 – the lowest close since February of last year. All 30 shares in the Dow finished the day with losses.
At one stage in the first hour of trading in New York, the Dow was down by just on 1,000 points.
The S&P 500 dropped 77.68 points, or 3.9%, to 1,893.21, its lowest close since October 2014.
The key US index is down 8% year to date. Nearly all 500 stocks in the index lost ground.
For both the Dow and the S&P 500 it was their biggest one-day percentage declines since August 2011.
The Nasdaq Composite ended the day down 179.79 points, or 3.8% at 4,526.25. It was sharply lower as Apple shares fell in early trading, but they rebounded after a letter from CEO Tim Cook to a market commentator leaked out.
The letter claimed that Apple had seem an uptick in sales in China in recent weeks and that news saw the wider market reverse course and rise sharply, back almost to break even.
But the fall resumed in the afternoon, eased, and then return in the final 10 minutes of trading.
In Europe, the sell off was steeper than in the US.
The Stoxx Europe 600 dropped 5.3% to close at 342.01, its biggest one-day percentage loss since December 2008 in the depths of the GFC
In Frankfurt, the DAX 30 fell 4.7% to end at 9,648.43, marking the first time since January it’s been below 10,000. The German benchmark suffered the biggest one-day slide since November 2011.
London’s FTSE 10 also plunged 4.7% to 5,898.87 for its biggest loss since March, 2009. France’s CAC 30 dropped 5.4% to end at 4,383.46, its biggest fall since November 2011 when the eurozone crisis was at its peak.
The Shanghai Composite closed down 8.5% at 3,209.91, bringing its losses since its June 12 peak to nearly 38%. The Shenzhen benchmark lost 7.7% yesterday.
China’s fall ignored moves by the government to steady the market. The government strengthened the ban on major shareholders from selling their stocks and approved pension funds to directly invest in shares.
The Hong Kong market lost more than 5%, Tokyo fell 4.6%, South Korea lost 2.5%, Taiwan’s market was down nearly 5%, India, 4% and Australia’s 4.3% was the biggest fall since the GFC as more than $A60 billion in value was list – taking the total so far this month to more than $A180 billion.
