Alarm bells rang across
world markets on Monday as a 9 per cent dive in Chinese shares and a
sharp drop in the dollar and major commodities panicked investors.
European stocks opened more than 3 per cent in the red after their Asian counterparts slumped to 3-year lows as a three month-long rout in Chinese equities threatened to get out of hand.
Safe-haven government bonds and the yen and the euro rallied as widespread fears of a China-led global economic slowdown and currency war kicked in.
Great fall of China
The near 9 % slump in Chinese stocks was their worst performance since the depths of the global financial crisis in 2009 and wiped out what was left of the 2015 gains, which in June has been more than 50 per cent.
The latest rout was rooted in investor disappointment that Beijing did not announce expected policy support over the weekend after its markets shed 11 per cent last week.
Compounding the real-time falls all index futures contracts slumped by their 10 per cent daily limit, pointing to more bad days ahead.
MSCI's broadest index of Asia-Pacific shares outside Japan
fell 5.1 per cent to a three-year low. Tokyo's Nikkei was down 4.1 per cent and Australian and Indonesian shares hit two-year troughs.
"China could be forced to devalue the yuan even more, should its economy falter, and the equity markets are dealing with the prospect of a weaker yuan amplifying the negative impact from a sluggish Chinese economy," said Eiji Kinouchi, chief technical analyst at Daiwa Securities in Tokyo.
There was further evidence that developed markets were becoming synchronized with the troubles. London's FTSE which has a large number of global miners and oil firms, was down for its 10th straight day, its worst run since 2003.
The pan-European FTSEurofirst 300, meanwhile, was down 3.1 per cent by 0830 GMT at 1,382.15 points, wiping around 260 billion euros ($298.61 billion) off the index and taking its losses for the month to more that 1 trillion euros.
US stock futures also pointed to larger losses for Wall Street's main markets, with the S&P 500, Dow Jones Industrial and Nasdaq expected to open down 1.8, 2.2 and 3.1 per cent respectively.
"We are in the midst of a full-blown growth scare," strategists at JP Morgan Cazenove said in a note.
European stocks opened more than 3 per cent in the red after their Asian counterparts slumped to 3-year lows as a three month-long rout in Chinese equities threatened to get out of hand.
Safe-haven government bonds and the yen and the euro rallied as widespread fears of a China-led global economic slowdown and currency war kicked in.
Great fall of China
The near 9 % slump in Chinese stocks was their worst performance since the depths of the global financial crisis in 2009 and wiped out what was left of the 2015 gains, which in June has been more than 50 per cent.
The latest rout was rooted in investor disappointment that Beijing did not announce expected policy support over the weekend after its markets shed 11 per cent last week.
Compounding the real-time falls all index futures contracts slumped by their 10 per cent daily limit, pointing to more bad days ahead.
MSCI's broadest index of Asia-Pacific shares outside Japan
fell 5.1 per cent to a three-year low. Tokyo's Nikkei was down 4.1 per cent and Australian and Indonesian shares hit two-year troughs.
"China could be forced to devalue the yuan even more, should its economy falter, and the equity markets are dealing with the prospect of a weaker yuan amplifying the negative impact from a sluggish Chinese economy," said Eiji Kinouchi, chief technical analyst at Daiwa Securities in Tokyo.
There was further evidence that developed markets were becoming synchronized with the troubles. London's FTSE which has a large number of global miners and oil firms, was down for its 10th straight day, its worst run since 2003.
The pan-European FTSEurofirst 300, meanwhile, was down 3.1 per cent by 0830 GMT at 1,382.15 points, wiping around 260 billion euros ($298.61 billion) off the index and taking its losses for the month to more that 1 trillion euros.
US stock futures also pointed to larger losses for Wall Street's main markets, with the S&P 500, Dow Jones Industrial and Nasdaq expected to open down 1.8, 2.2 and 3.1 per cent respectively.
"We are in the midst of a full-blown growth scare," strategists at JP Morgan Cazenove said in a note.
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