Panic: U.S. Stock Market Crash

By Updated at 2015-08-25 03:12:30 +0000


Panic: U.S. Stock Market Crash. Dow Jones on deep worry over Beijing's economy

U.S. stocks ended more than 4 percent lower on Monday, their fifth straight drop, in an unusually volatile session that confirmed the S&P 500 was formally in a correction.

The Dow Jones industrial average .DJI fell 585.66 points, or 3.56 percent, to 15,874.09, the S&P 500 .SPX lost 77.49 points, or 3.93 percent, to 1,893.4 and the Nasdaq Composite .IXIC dropped 179.79 points, or 3.82 percent, to 4,526.25.

The S&P 500 Index .SPX fell 3.9 percent to a 10-month low on Monday. The CBOE volatility index .VIX, a key measure of U.S. equity volatility, shot up to more than 50 percent at one point for the first time since the 2008 global financial crisis.

Because some investors often fund their investment in risk assets by borrowing low-yielding euro and yen, the sell-off in shares helped send both currencies to seven-month highs.

The euro rose as high as $1.1715 EUR= and last stood at $1.1571 while the yen strengthened to 116.15 to the dollar JPY= before stepping back to 118.80.

The dollar was not helped by falls in U.S. bond yields either, which diminishes the currency's yield attraction.

The 10-year U.S. Treasuries yield fell to a four-month low of 1.905 percent US10YT=RR in choppy trade on Monday and last stood at 2.012 percent.

Oil prices plunged more than 6 percent on Monday to 6 1/2-year lows after the dive in Chinese equities market.

U.S. crude futures CLc1 traded at $38.38 per barrel, near Monday's low of $37.75.

Brent crude futures fell to $42.23 on Monday and last stood at $42.69.

Brent stood not far from $36.20, its low hit in the aftermath of the global financial crisis, having fallen more than 66 percent from last year's peak.

Copper CMCU3, a good indicator of global economic activity because of its wide use, declined to a six-year low of $4,855 a tonne, falling more than 52 percent from its 2011.

The fall in commodity prices have hurt many commodity exporting countries' currencies.

The Australian dollar traded at $0.7177, having fallen to a 6-1/2-year low of $0.7044 AUD=D4 on Monday.

(Editing by Mark Bendeich)

Analysis: Michelle Fleury, New York business correspondent from BBC

The floor was buzzing long before the US market open. All the traders knew this wouldn't be a typical sleepy August Monday.
Minutes after the opening bell, the Dow fell a staggering 1089 points, its biggest ever points drop. One floor trader complained his shirt was soaked with sweat after the early plunge in stocks.
Another, Stephen Guilfoyle from Deep Value, told me the US markets were 'bordering on the edge of panic but not quite there yet.' He can remember the crash of 1987 and said this didn't feel as bad.
Indeed by late morning, US markets were showing some resilience, leading Mark Otto of J Streicher to conclude that Monday's big market moves in the US were similar to the 'flash crash' of 2010, when billions of dollars were wiped off some of the world's biggest companies in a matter of minutes, only to recover almost as quickly.

Tokyo_stockTokyo, August 21, 2015: A man walks past an electronic board displaying various Asian countries' stock price index outside a brokerage

Asian shares resume slide on fears over Chinese economy

Asian stocks looked vulnerable to another sell-off on Tuesday, with investors gripped by fears of a hard landing for the Chinese economy, the world's most important growth engine.

Japan's Nikkei .N225 index fell 3.8 percent to six-month lows while the MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS hit fresh three-year lows.

Underlining concerns about China, Japanese Finance Minister Taro Aso said on Tuesday he hoped China would take action to stabilize its economy and that Tokyo had no plan for now to unveil its own new economic stimulus package.

MSCI's all country world index .MIWD0000PUS fell 3.8 percent on Monday to a 10 1/2-month low, its biggest fall in almost four years. It has lost 9.2 percent over five days.

Leading the losses were Chinese shares .SSEC, which plunged more than 8 percent to post their biggest losses since 2007 on heightened worries that the Chinese economy was growing at a much slower pace than Beijing's 7 percent target for 2015.

Investors are also unnerved by uncertainty over U.S. monetary policy. The Federal Reserve has said it plans to raise interest rates this year for the first time in almost a decade.

The heavy fall in share prices worldwide over the past week has sharply reduced expectations of a U.S. rate hike in September, but the outlook is far from clear.

"There seems to be no consensus with the Fed on whether they are worried about acting too prematurely or too late," Toru Yamamoto, chief bond strategist at Daiwa Securities, said in report.

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