Singapore-based Daniel Martin, senior Asia economist for research firm Capital Markets, says China’s economy is more stable than many investors realize.
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On Wall Street, the Dow Jones industrial average lost 3.6%.
The Fed is still likely to begin to “gradually” hike interest rates sometime this year, Federal Reserve Bank of Atlanta President Dennis Lockhart said Monday in Berkeley, California, predicting that steady economic growth will continue.
Some analysts cautioned that the drop in China share prices reflects a necessary market correction.
China stocks opened sharply lower on Tuesday, extending a selloff that has unnerved investors around the globe. Markets in London, Paris and Frankfurt were all down more than 4 percent.
But mainland Chinese shares bucked the trend, with Shanghai Composite Index falling another five percent even after 15 percent fall in the last three days, including 8.5 percent drop on Monday. The central bank said the benchmark rate for a one-year loan will be cut by 0.25 percentage point to 4.6 percent and the one-year rate for deposits will fall by a similar margin to 1.75 percent. Of the other major Asian markets, only Japan slumped again with the Nikkei tumbling almost 4 percent.
While the carnage in China is continuing, the same can not be said for markets across the region – they’re rallying. During Monday’s trading it had briefly sank to 562.87 points (11.4 per cent), Xinhua reported.
After decades of rapid growth, China is slowing down, and investors globally are anxious that firms and countries which rely on high demand from China – the world’s second largest economy and the second largest importer of both goods and commercial services – will be affected. The euro was down 0.4% against the buck at $1.1547.
The bubble in Chinese stocks has burst, leaving the Shanghai index down a whopping 42% since June 12.
In currency trading, the dollar was at 119.99 yen on Monday, down from 122.05 yen on Friday.
European equities also dived on Monday following previous session’s deep decline, as the Stoxx Europe 600 was down over six per cent and Germany’s DAX fell four per cent.
Oil prices are up, but U.S. crude is still trading below $40 a barrel.
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In commodities front-month WTI futures are up by 1% at $38.59 while spot gold is largely unchanged at $1155.2 an ounce.
