Here's what traders are saying about the Chinese stock market 'bloodbath'

Via Dave Lutz at JonesTrading, here’s a guide to what traders are talking about after a huge sell off in Chinese stocks overnight.

Good Morning! A sea of red overseas has the S&P extending last weeks’ 2.2% drop. Nasdaq off 60bp, S&P off 50bp as the commodity complex continues to cycle lower. Heavy losses over in Europe, with the DAX off 1.6% in heavy trading — Losses led by a 2% drop in Materials and Fins, with no sector in the green early. The FTSE has managed to outperform, with the Gold Miners popping as the metal sees some covering. Bloodbath in Asia overnight though, with Shanghai Composite dropping 8.5% (biggest fall in 8 years) and savaging Hong Kong by over 3% as chatter grew that the PBOC would “wean the market off state support.” 75 stocks down to every 1 that rallied on SHCOMP, and a gauge of industrial companies plunged by a record 9%, the most among the 10 groups on China’s large-cap CSI 300 Index. India lost 2%, led by heavy losses in Tata Steel; Nikkei lost 1% as PPI didn’t impress, while Aussie snapped a 3day losing streak, led by a big pop in Gold Miners and BHP.

The US 10YY is dropping fast this AM, falling to its lowest level in 2 weeks near 2.32% – this follows sharp demand for Bunds, pushing Germany’s 10YY near 65bp early. The Greenback is seeing weakness this AM into Fed Week, as the Euro bolstered by a stronger-than-expected survey of IFO German business confidence. FT saying “euro-buying intervention by the Swiss National Bank last week” was reported to help stabilise Euro. Despite the weaker $US this AM, Growth-sensitive commodities are again struggling — Copper, Oil and Nickel all ~1%+ lower. Softs are all getting hit, with Corn off 2.7% early — while Gold is seeing contrarian buying continuing from Friday’s late CFTC Headlines. We have Durable Goods Orders at 8:30, followed by Dallas Fed Manf. Activity at10:30 and French “Jobseekers” data at 12

At 10am in DC, Companies including Apple, Berkshire Hathaway, Goldman Sachs join Sec. of State John Kerry, other admin officials at White House to announce ~$US140b in climate investments. We have 71 companies reporting today, with NSC, ROP pre-open and ALSN, AVB, BIDU, CDSN, EMN, HIG, PCL, RCII, SWN, TMK after the close in the SPX.

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