Spreadex Market Update
US losses cool, but only after truly staggering 1000 point plunge
As expected the US open brought with it a tsunami of selling, with the Dow Jones hurtling to a 1000 point drop in the first few minutes of the session. The US markets soon stabilised, but the Dow still fell below 16000 for the first time in nearly 18 month, and at points has threatened to post the worst one-day decline in its history. Things could, potentially (hopefully?), continue to calm if Dennis Lockhart is extremely dovish in his comments this evening; however, there is still a long way to go until the Atlanta Fed President speaks, with investors looking down the barrel of some pretty terrifying losses.
The wave of red that turned up with the US open took its toll on the European markets, which had spent the morning gradually doubling their losses in anticipation of the Wall Street bell. The FTSE, DAX and CAC are facing the worst single day since 2009, with the UK now looking at around a £70 billion loss in value on this Monday alone.
Tomorrow brings with it a few pieces of data, namely the German Ifo business climate number alongside US CB consumer confidence and new home sales figures. However, there is a very (very) large chance that none of this will matter if the People’s Bank of China doesn’t do something to try and prevent another day like today. The simple fact at the core of this crash is that no-one trusts China, with its faltering economy and draconian methods of intervention, to adequately fix the problems it has created. Each step it has taken over the past few weeks has merely exacerbated the situation, and the scattershot methodology of the PBOC suggests that, scarily, those in China don’t trust themselves to fix the issue either.
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