What will today’s trading session bring?
We’re only two days into the week and records for swings in global markets that have stood since the GFC have been tumbling.
Let’s recap some of the mayhem:
- The Shanghai Composite lost 8.5% on Monday, leading a global rout for stocks. The index has lost more than 25% of its value in five days.
- The ASX had its worst day in six years on Monday, losing just over 4%. This was quickly followed by one of its best days in years yesterday, when it added 2.7%.
- Wall Street got smashed on Monday too, with the S&P 500 losing almost 4%.
- On Tuesday, Shanghai completely tanked again but the rest of Asia defiantly rallied. The ASX had one of its best days in years, adding 2.7% but trading in a monster range of around 230 points after opening around 1.5% down.
- Apple shares were cratering in early Monday trade because investors were concerned about the outlook for the company’s sales in China. The company’s CEO Tim Cook took the extraordinary step of emailing Jim Cramer on CNBC to tell him everything in China was fine.
- The ASX200 briefly fell through the 5000 mark. Just six months ago it was knocking on the door of 6000.
- The Nikkei entered correction territory.
- Taiwan stocks had their biggest losses since the height of the European debt crisis.
- Crude oil collapsed to stunning new lows.
- The Thomson Reuters commodity index, an indicator of global demand, fell to its lowest level since 2002.
- China cut a key interest rate to free up money for stimulus. It also removed the cap on deposit interest rates, effectively introducing full interest rate liberalisation on deposits for the first time.
- The rate cut sent a rally in European markets and US futures into overdrive. with the major indexes pointing to opens of around 3.5%.
- Markets duly rallied as trade opened in the US – and then spectacularly tanked in the last hour of the day.
- Amid all the concern about the health of China’s economy, the iron ore price – usually something of a proxy for the China outlook – has rallied!
- ASX futures also rallied last night but are now pointing to LOSSES at the start of trade following the late calamity on Wall Street.
- The ASX “fear index”, a measure of how much traders think prices are going to whip around, exploded to record levels amid the Asian rally yesterday.
- The Aussie dollar crashed to US70c, its lowest level since the GFC. It has picked up a bit of ground since.
- September was supposed to be the start of one of the most anticipated events in global markets for years – a return to US interest rate rises. But lots of people are now saying the Fed will chicken out. In fact, the head of the world’s biggest hedge fund thinks the Fed will start a new round of QE!
And it’s only Wednesday morning.
Seems like a good time to break out the adage:
Roses are red,
Violets are blue,
I don’t know what’s going to happen,
And neither do you.