A global selloff was triggered after Asian markets crashed early on Monday, leading to declines worldwide. The Shanghai Composite slid 8.5% in its biggest one-day slide since 2007, causing the market to drop and other markets to post negative results, as analysts fear that the Chinese market crash is a potentially more immediate risk than the Greek debt crisis. U.S. stocks have had their fifth consecutive session of losses, as they were under pressure from additional factors, such as weak earnings reports, the recent commodity rout as well as the upcoming Federal Reserve’s Federal Open Market Committee (FOMC), in which details regarding an interest rate hike may be revealed. The Nasdaq led the declines with a 48.85 points decline (0.96%) to trade at 5039.78, sending the index 3.4% lower than last week’s all-time high close. The Dow Jones industrial average fell 127.94 points, or 0.73%, to trade at 17440.59 after all, but 5 of its 30 components closing lower. The Standard and Poor’s 500 Index fell 12 points, or 0.58%, to trade at 2067.64, as nine out of the index’s 10 sectors post declines. The utilities sector rose during the day, while the energy and materials sectors suffered from the most significant declines.
The Federal Reserve will begin its Federal Open Market Committee today, scheduled to end on Thursday with new announcements. The top focus is the oft-discussed interest rate hike slated for as early as September. The Federal Reserve has been vocal about their intention to raise borrowing costs this year, possibly over a prolonged period of time. Rising interest rates limit the amount of money available in the markets, leading to its inevitable valuation. Additionally, large exporting companies, who make up a large portion of the components found in major indexes, are likely to suffer from receding earnings due to unfavorable exchange rates.
European stocks also suffered declines, as Greece meets with its creditors in an effort to resolve the country’s ongoing debt crisis. In the meantime, the focus was instead on earnings reports. Swiss bank UBS AG (SIX:UBSN) shares declined, despite managing higher-than-expected profits, and Airline Ryanair Holdings PLC (NASDAQ:RYAAY) declined after failing to raise its full-year profit guidance. The UK’s FTSE fell 0.7%, as consumer and financial led the declines. London Stock Exchange (LONDON:LSE), RSA Insurance (LONDON:RSA), Persimmon (LONDON:PSN) and Barratt Developments (LONDON:BDEV) declined 2% each. The German DAX fell 2.1% as all of its components underperform. The French CAC fell 1.9% as all but one component post declines.
UK GDP and U.S. consumer confidence reports will be released today. However, the major focus this week is the Federal Reserve’s FOMC meeting scheduled to end on Thursday.