Spreadex Market Update
Chinese ‘Black Monday’ sees fog of fear thicken over Western markets
The People’s Bank of China remains in ‘see what sticks’ mode, and so far nothing has been able to provide an adequate tourniquet for the market-wide bloodshed that has only intensified this Monday. The latest move by the PBOC saw the central bank announce that local government-managed pension funds will be able to invest in the markets for the first time, in an attempt to pour billions of yuan into an equity market that is currently drowning in losses.
However this move only inspired panic not peace, and the fervent selling, with investors fleeing in droves, infected the Western indices from the moment the bell rang. At points the FTSE has hit prices not seen since the start of 2013, sporadically plunging below 6000 and remaining firmly in correction territory. Of course the UK index’s dramatic decline is being fuelled (pardon the pun) by the rampant evacuation of investors in the commodity sector, as Brent Crude and copper hurtle towards fresh lows.
The DAX and CAC were in no way excluded from this panicky trading, with the German index approaching bear market territory as it sinks below 10000 for the first time since the middle of January. The fog of fear over the state of the Chinese economy is only thickening, and with little in the way of non-Chinese news to come this Monday, the markets are going to struggle to escape today without some fairly ugly scars.
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