Global markets are continuing the meltdown that began last Friday and once again it was the Asian markets that lit the fuse. And some are tagging it “Black Monday” as panic takes hold of Wall Street.
For the major Asian indices, it was a bloodbath with the Shanghai Composite Index falling 8.5 percent to 3,209 – a low not seen since 2007 — while the Hong Kong Hang Seng Index shed 5.2 percent to close at 21,251 while the Nikkei 225 dropped 4.6 percent to 18,540. The Singapore Composite Index dropped 4.3 percent to close at 2,843, and the Sensex fell 5.9 percent to 25,742.
In the fashion apparel sector, Li & Fung Ltd. lost 6.2 percent to close at $5.27 while Luen Thai Holdings Ltd. dropped 3.9 percent to $1.24. Giordano International lost 4.2 percent to finish at $4.10 while Chow Tia Fook Jewellry Group shed 5 percent to close at $7.08. Trinity Ltd. fell 10 percent to close at $0.90. Figures are in Hong Kong dollars.
The declines triggered a steep drop in European issues. And futures in the U.S. were significantly off with Dow futures losing 600 points.
The S&P 500 opened down 4 percent to 1,880, the Dow Jones Industrial Index opened down 975 points to 15,500 and the Nasdaq opened down 8 percent to 4,333. The numbers are enormous and changing rapidly.
It definitely feels like there is fear in the U.S. market with Nasdaq 100 September futures hit the circuit breaker and was halted. The S&P 500 futures were halted for the first time in its history. TD Ameritrade has disabled the futures margin trading for the day. Margin trading is making trades on credit, not using actual money within a person’s account.
The New York Stock Exchange has invoked Rule 48, which is a rarely used tool to stabilize prices at the market open. This rule allows market makers to not post pre-market opening prices. For example, Apple stock is trading below $100 in pre-market trading, losing 10 percent of its value. Many consider this a “no brainer” level. Meaning if it goes below $100 a share, it’s a no brainer for investors to buy.
Also sliding this morning is oil, which has dropped below $40 a barrel, considered a key level of support for the energy companies. Oil was lately trading at $38 a barrel over worries that the Chinese economy is rapidly declining. Chinese manufacturing is a huge importer of oil. While lower oil prices benefits many consumers here and helps apparel company costs go down, it also means big layoffs in the energy industry.
The Chinese markets have given back all the gains made in July when the government tried to support stocks to the tune of 900 billion yuan, or $141 billion, according to estimates by Goldman Sachs. The Chinese market has now entered negative territory for the year. Eighty percent of China’s tradable stocks hit the downside limit during the day and many stocks are still not trading. Investors had hoped that the central bank would step in, but as of Monday there was no indication that Bejing would step in this time.
Big losers in the retail side include FitBit, which is plunging over 15 percent to $32.24, and Groupon is down almost 10 percent to $3.71 while many retail and apparel issues were shedding between 4 and 5 percent.