Today’s Hot Topic is Black Monday, the dark day when billions of dollars was wiped off global indices.
So…What Happened?
• Major stock markets worldwide reacted with dramatic falls on the outlook that the Chinese economy might not continue with its outstanding past performance. • The Shanghai composite dropped 8.5% – it’s worst day since 2007 • The Nikkei 225 index slumped 4.6%, a six month low and its largest drop since 2013 • The Hang Seng fell 5.2%, its largest sell-off in 30 years. • The German DAX 30 and French CAC 40 also felt the negative force of the Chinese economy. • They suffered declines of 10.2% and 8.4% respectively. • Shares also dropped in New York with the S&P 500 slipping on Monday by 128 points during the European session and the Dow Jones decreasing by 1,128 points at the same period.
Unsurprisingly the hashtag Black Monday trended on social media with comparisons being made to the infamous black Monday of 1987!
So… What lead to this situation?
• The Caixin China Services PMI for August measures factory performance, and showed that the index dropped to 47.1 in comparison to the previous month’s 47.8. • The PMI was at its lowest level of the last six years. • Earlier in the month the release of China’s Q2 GDP revealed an expansion of just 7%, the lowest reading of the last six years. • Also earlier this month the Peoples Bank of China devalued the yuan for 3 consecutive days, which lead to the Chinese stock market’s plunge. • The negative impact to global stocks highlighted the fact that China is no longer just a global goods production line but now also a large consumer of both products and ser-vices. • There’s an increasing number of producers who depend on their products performance in China so if Chinese demand decreases, the producers’ targets can easily derail.
What’s next?
• Many investors are licking their wounds after the Black Monday blow • For some, Tuesday was worse with the S&P 500 5 points above the lowest level of its last big tumble • With a $27 trillion debt, the markets are losing faith in the Chinese government’s ability to handle the situation. • Some analysts are saying that the Shanghai Composite Index may extend its decline by 13% should it stay below a critical technical level on Wednesday.
How was your black Monday? Comment below and let us know your thoughts.
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Today’s Hot Topic is Black Monday, the dark day when billions of dollars was wiped off global indices.
So…What Happened?
• Major stock markets worldwide reacted with dramatic falls on the outlook that the Chinese economy might not continue with its outstanding past performance.
• The Shanghai composite dropped 8.5% – it’s worst day since 2007
• The Nikkei 225 index slumped 4.6%, a six month low and its largest drop since 2013
• The Hang Seng fell 5.2%, its largest sell-off in 30 years.
• The German DAX 30 and French CAC 40 also felt the negative force of the Chinese economy.
• They suffered declines of 10.2% and 8.4% respectively.
• Shares also dropped in New York with the S&P 500 slipping on Monday by 128 points during the European session and the Dow Jones decreasing by 1,128 points at the same period.
Unsurprisingly the hashtag Black Monday trended on social media with comparisons being made to the infamous black Monday of 1987!
So… What lead to this situation?
• The Caixin China Services PMI for August measures factory performance, and showed that the index dropped to 47.1 in comparison to the previous month’s 47.8.
• The PMI was at its lowest level of the last six years.
• Earlier in the month the release of China’s Q2 GDP revealed an expansion of just 7%, the lowest reading of the last six years.
• Also earlier this month the Peoples Bank of China devalued the yuan for 3 consecutive days, which lead to the Chinese stock market’s plunge.
• The negative impact to global stocks highlighted the fact that China is no longer just a global goods production line but now also a large consumer of both products and ser-vices.
• There’s an increasing number of producers who depend on their products performance in China so if Chinese demand decreases, the producers’ targets can easily derail.
What’s next?
• Many investors are licking their wounds after the Black Monday blow
• For some, Tuesday was worse with the S&P 500 5 points above the lowest level of its last big tumble
• With a $27 trillion debt, the markets are losing faith in the Chinese government’s ability to handle the situation.
• Some analysts are saying that the Shanghai Composite Index may extend its decline by 13% should it stay below a critical technical level on Wednesday.
How was your black Monday? Comment below and let us know your thoughts.
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