Fears About China Lead To Bloodbath In U.S. Financial Markets

U.S. stocks spiralled Monday, following the trend in other global markets which experts say has been brought about by the reactions to fears of a continuing slowdown of economic growth in China.

European stocks were down more than four percent, while in it’s greatest one-day drop in eight years the Shanghai Composite dropped 8.5 percent. Japan’s Nikkei closed down 4.6% and stock in India experienced their biggest fall in seven years.  Stocks in India suffered their biggest fall in more than seven years while Germany’s DAX lost nearly six percent and french stock fell while French stocks fell lost seven percent. London’s FTSE 100 although faring a bit better, traded down by five percent.

In the U.S., the Dow Jones industrial average fell between 300 to 500 points after experiencing falls as much as 1,089 points in the open.

CEO of Sarhan Capital, Adam Sarhan, said “Fear has taken over. The market topped out last week, We saw important technical levels break last week. Huge shift in investor psychology.”

Chief market strategist at Wunderlich Securities, Art Hogan said “Everything seems to be off the same percentage which basically means the index guys are selling out.”

Hogan said sharp opening losses were the result of uncertainty amongst traders and The New York Stock Exchange(NYSE)  implementing the rarely used Rule 48 for the Monday stock market open.

The rule lets NYSE to open stocks without indications.

Hogan said “It was set up for situations like this. The rule was last used in the financial crisis.”

Chief market economist at Rockwell Global Capital’s, Peter Cardillo said “The market is not falling on actual facets of a sub-prime situation. It’s falling on fear of the unload of China. That’s really behind this move.”

Fears about China’s economic growth began after a key gauge of the country’s manufacturing activity plummeted to its lowest level in six years.

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