Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

China share plunge smacks world markets; S&P, Nasdaq in correction

Stock MarketsAug 24, 2015 05:55PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. An investor monitors share market prices in Kuala Lumpur, Malaysia

By Sinead Carew

NEW YORK (Reuters) - A near-9 percent dive in China shares sent world stocks and commodity prices tumbling on Monday, and U.S. stocks ended a volatile day with the S&P 500 and Nasdaq composite indexes sliding into correction territory.

After dropping more than 1,000 points, or almost 7 percent, at Wall Street's open, the Dow Jones industrial average cut its losses but still finished down 3.6 percent. The Standard & Poor's 500 index closed down 3.9 percent for the day and was 11 percent lower than its May record high.

The benchmark S&P index has accumulated 9.95 percent of losses in just five sessions.

A key measure of U.S. equity volatility, the CBOE Volatility Index, or VIX, shot above the 50 mark for the first time since 2009, dropped back near 30 and then rose to 40.

Some U.S. investors went bargain hunting after the dip, causing at least some of the accelerated selling toward the day's end, according to Randy Frederick, managing director of trading and derivatives for Charles Schwab (NYSE:SCHW) in Austin, Texas.

"It's a very risky proposition to take things home overnight in this kind of a market. If you got a profit that quick, it's often safer to take a small profit than run the risk," said Frederick, "If things don't settle down in China we could have another ugly open tomorrow."

Hong Kong's Hang Seng index futures were down 2 percent and Nikkei futures were down 6 percent, suggesting there may be more losses in store when trading resumes in Asia on Tuesday.

European stocks closed off 5.4 percent after Asian shares slumped to three-year lows when a three-month-long rout in Chinese equities threatened to get out of hand.

U.S. markets had some reprieve after Europe closed but then pushed back down toward early lows in late afternoon.

The Dow Jones industrial average closed down 588.40 points, or 3.57 percent, at 15,871.35. The Standard & Poor's 500 Index was down 77.68 points, or 3.94 percent, at 1,893.21. The Nasdaq Composite Index was down 179.79 points, or 3.82 percent, at 4,526.25.

U.S. traders had rushed for the exits in Monday's first half-hour of trading when deepening concerns about a China-led global economic slowdown and tumbling commodities prices followed a 5 percent decline in the S&P and Dow on Thursday and Friday.

"Anybody with a pulse was nervous when the market opened," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

Monday's trading volume exceeded 14 billion shares, double the 7 billion daily average for the month to date, calculated by BATS Global Markets. In comparison, about 10.6 billion shares changed hands in Friday's selloff.

Oil prices settled sharply down after plunging to six-and-a-half year lows. Safe-haven U.S. government and German bonds, as well as the yen and the euro, rallied as currency concerns kicked in due to China's recent currency devaluation.

U.S. crude settled down 5.5 percent at $38.24 a barrel after falling as low as $37.75 earlier. Brent settled off 6 percent at $42.69 after falling as low as $42.51, taking both under January's lows for the first time. Worries about weaker demand from normally resource-hungry China added to global supply glut concerns.

The S&P's energy sector was the weakest performer, with a 5.2 percent decline for the day.

Copper, seen as a barometer of global industrial demand, hit a six-year low, and nickel fell sharply.

GREAT FALL OF CHINA

The slump in Chinese stocks was their worst performance since the depths of the global financial crisis in 2007 and wiped out what was left of 2015's gains, which in June stood at more than 50 percent.

Many traders had hoped Beijing would take support measures, such as an interest rate cut, over the weekend after China's main stock markets slumped 11 percent last week.

With serious doubts emerging about the likelihood of a U.S. interest rate rise this year, the dollar was down 1.6 percent against other major currencies after falling as much as 2.5 percent earlier in the day.

The Australian dollar fell to more than six-year lows and many emerging market currencies also plunged, while the frantic dash to safety pushed the euro to a seven-and-a-half month high of more than $1.17.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 5.4 percent to a more than three-year low. Tokyo's Nikkei ended down 4.6 percent and Australian and Indonesian shares hit two-year troughs.

London's FTSE 100, with its large number of global miners and oil firms, ended down 4.7 percent for its 10th straight decline - its worst run since 2003.

The MSCI all world stock index was off 3.8 percent at the end of the U.S. session.

China share plunge smacks world markets; S&P, Nasdaq in correction
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email