Dow plunges after rollercoaster trading on ‘Black Monday’ for global markets
Hundreds of billions of dollars were wiped off global stocks on Monday as a panic that started in China spread across the world.
The Dow Jones Industrial average lost 586 points, or 3.56%, a fall of more than 13% from its record high reached in May. When the markets opened the Dow plunged 1,089 points – the index’s largest ever intra-day decline – before staging a slight recovery. After reaching that record high just three months ago, August is on track to be the Dow’s worst month since February 2009.
The S&P 500 and Nasdaq also closed down – the latter at a seven-month low. Markets in most of the rest of the world suffered some of the biggest one-day falls so far this year.
The drop was so dramatic that the White House issued a statement reassuring worried investors that the US economy would be better able to withstand a China-induced slowdown in the global economy than it had been in 2008, when the collapse of Lehman Brothers lead to a near-meltdown of the global banking system.
“There is no doubt the global economy is more interconnected that it ever has been,” Josh Earnest, Barack Obama’s chief spokesman, said. “What I would encourage people to evaluate is the ongoing strength and resilience of the US economy.”
Nick Kounis, head of financial markets research at investment bank ABN Amro, said: “The potent and self-re-enforcing cocktail of worries about China, emerging markets and commodities has triggered a global rout in equity markets. Against this background all eyes are now on the Chinese authorities. We think they will deliver with further monetary easing sooner rather than later.”