The week started out with a bang and news out of Asia is not encouraging. Asian stocks slumped to 3-year lows on Monday as a slump in Chinese equities continued and world markets reacted.
China’s stocks plunged 8 per cent with the benchmark index erasing its gains for the year as government support measures brought no relief to investors fearful of a further slowdown in the world’s second-largest economy. The yuan weakened against the dollar.
Chinese stock indices and the Shanghai Composite Index fell, pulling down Japan's Nikkei index as worries over slower Chinese growth increased.
Japan dropped 3.5 per cent at the start of the day, down 10% since it peaked on August 11th.
"Markets are panicking. Things are starting look like the Asian financial crisis in the late 1990s. Speculators are selling assets that seem the most vulnerable," said Takako Masai, the head of research at Shinsei Bank in Tokyo.
Commodities Plunge
Fears spread to the commodities markets where energy and raw materials dropped heavily. The Aussie dollar dropped with iron and oil taking the biggest hit. Copper, seen as a barometer of global demand, tumbled to six-year lows.
U.S. West Texas Intermediate (WTI) and globally traded Brent hit six-year lows on Mondays, dropping to levels last seen during the credit crunch of 2009.
WTI traded well below $40 a barrel and Brent had fallen under $45 per barrel by 0340 GMT.
A 2.6 percent drop in S&P 500 mini futures during Asian trading hours pointed to a continuation of a global fall.