On Monday at market opening, the American Dow Jones index crumbled by more than 1,000 points to 15,470. This is the maximum daily fall of the index: never before has the index fallen by more than 800 points. By the day’s end the index corrected upwards and closed at 15,871, meaning the day’s fall stood at 3.6%. Other American indices didn’t fare much better: the NASDAQ Composite fell by 3.8% and the S&P500 lost 3.9%.
Yesterday’s demise of the US market, and elsewhere throughout the world for that matter, followed that of Asia and China in particular. On Monday the Shanghai Composite crashed immediately by 8.5%, demonstrating the largest daily losses for the past 8 years. The fall hasn’t stopped. By Tuesday’s close, the most important Chinese index lost another 7.6%.
Market participants are inclined to believe that Asian markets collapsed today due to yesterday’s American fall, which, in turn, followed yesterday’s fall in Asia. The domino effect is sending waves across the world with markets falling one after another. However, what’s happening now on world markets looks more like a correction than a potential market crash. This doesn’t concern China, where the bears are really gaining ground. From what we see today, America is managing to break out of the vicious cycle. By 12:00 EET, futures on the S&P500 were up 3%. So relax, it’s not quite kicked off, for now at least.