Global markets are all over the place these with Asian stocks pluming down to three-year low. MSCI recovered just 1.1% after experiencing the worst numbers in the last three years on Monday. Japan’s Nikkei closed at 4% down after very volatile trading during the day.
The recent market turmoil has left us all feeling suicidal and unfortunately this is not the end of it. There is more to come, according to the top economists. While China’s economy is slowing down even more, US Fed might consider raising the rates. This will result in further unease in the world economy. Is it possible that 1990s Asia’s financial crisis on the way?
(source - reuters.com)
U.S. stock futures somewhat recovered by 2%, which seems to be a buyback after very hysterical selling in the last few days. China, meanwhile, saw Shanghai Composite Index dropping yet another 7%. Just to see a complete picture, the index dropped 15% during the previous couple of days, including Monday’s 8.5% major drop.
All eyes are on the epicenter of the financial disaster, aka Chinese stocks. Major market analysts claim that the market is indeed in apocalyptic state. There is a serious panic and there are no signs of any serious government moves of intervention.
Uncertainty grows over US monetary policy and potentially unwanted consequences for US economy, while Fed mentioned its plans to raise interest rates “sometime this year”.
Euro rose to $1.1715 while the yen climbed to 116.15 to the dollar. Both currencies, however, slipped back on Tuesday with euro going down 0.7% and yen slipping down to 119.05 vs dollar. Wide-spread risk aversion is in action by the meltdown Chinese equities.
Some traders mention “Lehman” crisis like situation with some demand for buying dollar on the dips. The next couple of days might reveal more on what waits ahead.