U.S. and Eurozone stock markets got slammed on Monday as global uncertainty over China pushes traders towards safe-haven investments. Despite the fact the Asian shares managed to move away from three-year lows in early Asian trading, major benchmarks have since lost momentum and are likely returning to their downward spiral.
U.S. shares started the week with a dramatic four-digit decline in the Dow Jones Industrial Average. The index fell nearly 1,100 points, only to erase those losses later with aggressive three-hour rally. Unfortunately, the rally was hardly enough to stop the global downtrend that has been plaguing the markets. Renewed China losses had spurred an additional round of sell-offs, sending the Dow Jones down 588.4 points, or 3.6%, for the day. The index has closed at 15,871.35 after one of its worst one-day point-drops in history and is down 13.3% from its May 13 record of 18,312.39. Other major indexes also performed poorly; the S&P 500 Index fell 77.68 points, or 3.94%, to close the day at 1,893.21, down more than 11% from its record high. The Nasdaq Composite tumbled 179.79 points, or 3.82%, to close the day at 4526.25, down 13.3% from its record high.
European shares had their worst day since 2008, as global markets feared that China’s economy is slowing down at faster rate than previously expected. The STOXX 600 fell 5.33% and closed at 342.01 as the pan-European benchmark suffered its biggest one-day percentage loss since late 2008. Other major European benchmarks joined the massive selloff; the German DAX 30 fell 4.7% to close the day at 9,648.43, the first sub-10,000 close since January. Monday also marked the index’s biggest one-day loss since late 2011. The DAX is heavily oriented towards exports, making the euro's 1.7% advance on the US dollar even more troublesome for the index’s major components. The French CAC 40 fell 5.35% to trade at 4383.46 and the UK’s FTSE 100 fell 4.7% to 5,898.87 in its biggest one day drop since 2009.
Despite Monday’s turbulent trading, U.S. and European shares expected to open stronger. U.S. stock futures (ESc1) have gained 2%, signaling that the New-York markets are likely to open stronger today. Analysts expect that European shares will gain more than 2% today. German GDP data will be released early today, followed the German business climate index and U.S. housing data. U.S. durable goods orders will be released on Wednesday followed by U.S. GDP data on Thursday. UK GDP will be released on Friday, followed by German inflation data.