Investors around the world continue to be spooked by the economic woes of China, and stock markets have taken a steep nosedive as a result.
All the major markets in Europe dropped by around 5 percent including London's FTSE 100 index which closed down 4.7 percent at 5,898.86 with losses essentially wiping over 70 billion pounds from the index due to the falls.
In a manic day in New York, the Dow Jones dropped 7 percent, and although it fought well to recover half the losses it still closed down 3.5 percent. Traders looked on in despair as the Dow fell below 16,000 for the first time in 2-years before its miraculous recovery late in the afternoon.
The Nadaq sank 9 percent but recovered to post only a 3.4 percent loss at closing, while the S&P 500 also lost 4 percent.
Chinese markets fared no better with the Shanghai Composite suffering its worst closing for 7-years with a 9 percent loss. Trading firm CITIC Tokyo International announced it was revising its Chinese capital inflow plan at the end of the hectic day.
Almost 100 billion pounds were wiped off the FTSE before the semi-recovery, and traders in the U.S. were aware that this wasn’t going to be the usual quiet Monday on the floor even before the New York stock exchange opened and the Dow plunged a monumental 1090 points, a record point’s drop.
A sharp slowdown in China, the world’s second largest economy, has set investors on edge in recent months. The sense of panic was palpable and one floor trader mentioned that he had bitten through all his fingernails just minutes after the opening bell in New York.
Another trader said the short-term outlook seemed bleak but that it didn’t feel to him like a re-run of the 1987 crash. Deep Value chief analyst Stephen Guilfoyle said, “Tensions are high and it looks like the markets are looking down the barrel, but I remember 1987 and this is nothing like it.”
Guilfoyle’s remarks proved true as US markets stormed back late in the day to reduce the losses by nearly half.
