The pan-European FTSEurofirst 300 was last down 5 percent at 1,355 points, wiping around 400 billion euros ($460.16 billion) off the index and taking its losses for the month to more than 1 trillion euros. The Nasdaq composite declined 19.76 points, or 0.4 percent, to 4,506.49. Currencies fell hard in developing economies – particularly those that rely heavily on the export of commodities and oil, both of which China is a big consumer.
U.S. stocks are sharply higher in midday trading after China’s central bank cut its key interest rate in a bid to boost growth in the world’s second-largest economy. Treasurys surged as investors bought less risky assets. The rout continued Monday as China’s main stock index sank 8.5 percent. An index is said to be in correction when it closes 10 per cent or more below its 52-week high.
For so many years, China has been deemed the “global growth engine”.
Furthermore, the amount of money which banks are mandated to keep with them has also been reduced.
Stock traders can’t relax yet about the gyrations in the world markets.
The latest SCF data, which come from 2013, show that just 18% of all US families directly own shares or stock mutual funds. Worries about weaker demand from normally resource-hungry China added to global supply glut concerns. The Fed isn’t expected to deliver a policy update until it wraps its next meeting of policymakers on September 17. The FTSE 100 index of leading British shares gained 3.1 percent. China’s benchmark Shanghai composite index tanked 8.5 percent. Other Asian markets remained jittery, though the yo-yoing from fresh lows suggested some investors might be venturing back in to snap up bargains.
In Europe, Germany’s DAX fell 4.7 percent, while the CAC-40 in France slid 5.4 percent.
And Monday didn’t start off any better, with the Dow plummeting another 1,000 points in early trading.
Oil rebounded from its lowest closing level in more than six years.
After last week’s tumble Apple is now trading at less than 11 times next year’s EPS forecast, while its dividend yield is up to 1.8%. Research by James Poterba and Andrew Samwick from the mid-1990s investigated what happened when the stock market went up, and they found “little evidence that luxury spending rises in the wake of rising stock prices“.