The sums wiped out in the global stock markets yesterday have reached billions, as the panic of China’s equity turmoil extended across the world.
The Dow Jones Industrial Average, one of the most watched stock indices in the world, collapsed 586 points, with the decline reaching 1.089 points at the market opening. DJIA index’s total slide up to now stands to more than 13 percent lower comparing to the last May’s highs.
The S&P 500 and NASDAQ indices have both lost just below 4 percent of the value in yesterday’s trading, ending the day at the four-month low. According to Reuters, these three markets experienced the biggest one-day percentage fall in the last four years.
The total loss of the British FTSE 100 index closed at 4.67 percent down. Germany’s DAX, France’s CAC and Spain’s index have all lost more than 5 percent of the value in a single day.
The market turmoil in China is not helping Russia either. Russia’s ruble dropped below 71.00 mark towards the dollar, with the decline amounting to 3 percent of the currency value, as USD/RUB is nearing 2015 lows. Collapsing oil prices and Western sanctions adds more weight to the weakness of the ruble.
US dollar continued to decline amid serious doubts that the interest rate will be increased this year. “A reasonable assessment of current conditions suggests that raising rates in the near future would be a serious error that would threaten all three of the Fed’s major objectives: price stability, full employment and financial stability,” said a former US Treasury secretary Lawrence Summers in an article for the Wall street Journal.
US dollar index has dropped to a new lows when it reached 92.52 mark yesterday, then slightly recovering and closing the day at 93.36. EUR/USD, however, was trading at seven month high, reaching above 1.17 level.
Oil prices, continuously falling for a week, have dropped to additional six percent yesterday, with Brent plunging to the low of 42.51 US dollars per barrel.
Yesterday’s flash crash has once more proved how interconnected the global economy is, with the fears spreading reinforcing the global selloff. The attention of the investors is currently fully concentrated on the Chinese authorities, expecting an intervention with a monetary easing program shortly.