August 24, 2015 was no ordinary trading day. It was Black Monday. Investors were already anticipating some bad news. After all, no one is ever insulated from China’s economic woes, not since the world’s second largest economy helped world economies to grow for the last 20 years.
China’s stocks spiraled down 9% Monday, and along with it are other markets after the devaluation of its Yuan in early August. Major commodities like oil, platinum and palladium also suffered a blow.
US stock market had its biggest sell-off in four years with Dow Jones losing more than 1,000 points in the first half of Monday. London stock market lost almost GBP74 billion, while the rest of Europe had their worst trading day since 2011.
In Asia, everything was ajar with different currencies behaving like crazy. Australia suffered the lowest downfall since 2009 following the US crisis, and Japan lost 4%.
Black Monday’s effects are not yet over as Chinese stocks continue tumbling down more than 6% at the opening of Tuesday’s trading. Hong Kong was slightly hit and dived 0.67% at the opening. South Korea was unchanged, while the Philippines lost 2.8%.
Analysts doubt the efforts of the Chinese government to beef up its stocks. Adrian Brown of Al Jazeera commented that, “everything the government has so far tried has failed”.
According to David Blanchflower, an economics professor, Black Monday could either be the turning point or the end. He added that policymakers may preempt further losses but with much difficulty citing the intricacies of cutting rates by 500 basis points.
The Chinese government coined the term Black Monday referring to the market’s steepest fall in 8 years. The Shanghai index has shed off more than a third of its value since June this year, and has continued its fatal nosedive.
China’s Black Monday dominated the front pages of various newspapers and went viral, igniting panic in isolated areas. The greatest fear is that central banks all over the world may not have enough flexibility to thwart a major market crash.