Latest: PBOC finally takes actionShanghai Composite index shed another 7.6% todayBeijing traders battered by slumpWhy China is affecting global marketsShares in meltdown after China’s Black Monday – as it happened 11.27am BST #China has cut it's benchmark interest rate by 25bps. Stocks rallying globally. TM 11.25am BST Breaking News: China’s central bank has cut interest rates in response to the market turbulence.The People’s Bank of China has slashed benchmark interest rates by a quarter of one percent. That’s not a huge move, but a very significant one given events of recent days.#China cuts reserve ratio by 0.5 percentage point 11.12am BST Today’s UK newspapers are packed with coverage of the market slump, and a few puns too. Here’s a round-up:China stock market crisis: what UK national newspapers think http://t.co/ftj4OAYsdY 11.01am BST What goes down, must come up again*Meanwhile, S&P futures up 3.2% and Dow Futures up nearly 500. 10.59am BST Back in London, the FTSE 100 index of leading blue-chip shares is now up almost 2.9%, or 164 points, at 6065, as Turnaround Tuesday gathers pace.That means it has clawed back more than half of Monday’s slump, which wiped off £79bn from top shares.“The drama and unpredictable scenes of “Black Monday” may still be grabbing headlines and causing fear among investors, however, the impact could be good news for UK businesses.Yesterday’s events will put additional pressure on the People’s Bank of China to further devalue its currency, with a cheaper Yuan benefiting UK industries importing from China.” 10.58am BST China’s official news agency, Xinhua, has admitted that the country’s stock markets suffered “another nightmarish day” on Tuesday. Xinhua says:“The losing streak in China came despite the government’s decision on Sunday to allow pension funds to invest in the stock market.” 10.39am BST Christopher Balding, a professor of finance and economics at Peking University’s HSBC Business School, believes Beijing has given up supporting its stock market despite the huge losses of recent days (as Bloomberg also flags up).Prof Balding told my colleague Tom Phillips that stock brokers have now recognised that China has pulled away the safety net, triggering today’s big selloff. “It appears as if the government has taken a very conscious decision that they are not going to plough any more money into the stock market.“I remember talking in the early days [of the recent crash] to some brokers and they said they would see an enormous bulge of orders and they would all be 10% above the market. Now, I was talking to a couple and they just said there was just absolutely no buying interest.” 10.24am BST Billionaires have been hit hard by the market mayhem, writes Bloomberg’s Devon Pendleton:Asia’s richest person lost $3.6bn on Monday, the most among all billionaires worldwide, as China’s stock markets had the biggest plunge since 2007 and a wave of selling spread across the globe.Wang Jianlin saw $2bn wiped from his stake in Dalian Wanda Commercial Properties Co., according to the Bloomberg Billionaires Index, after the Hong Kong-listed property developer tumbled 17 percent to its lowest level since it went public in December. Wang also lost nearly $1bn from his Shenzhen-traded Wanda Cinema Line Co., which fell by the exchange-exposed limit of 10 percent on Monday. His fortune stood at $31.2bn after the decline.From froth to freefall: Asia's richest got crushed yesterday, region's richest lost $3.6B http://t.co/cnQx1kuSxH @JillMao @TomMetcalf123 10.19am BST Policymakers in Beijing have suspended the policy of intervening in the stock market while they debate their next step, Bloomberg reports.Some officials argue that falling stocks will have a limited impact on the world’s second-largest economy and that the costs of supporting the market are too high, said one of the people, who asked not to be identified because the deliberations are private. Officials who back intervention say tumbling shares pose a risk to the banking system, the people said.The Shanghai Composite Index sank 15 percent over the past two days, extending a $4.5 trillion rout since mid-June that has shaken confidence among equity investors around the world. Chinese policy makers are trying to balance a pledge to loosen their grip on markets against the need to maintain financial stability amid the weakest economic expansion since 1990.China has stopped supporting the stock market http://t.co/Ns9WV4kQUV 9.58am BST Mining giants are taking steps to protect themselves from the slump in commodity prices, and fears over China’s economy. 9.56am BST If you’re trying to work out how China’s stock market turned sour so quickly, check out this timeline: Related: China financial crisis: from dizzy heights of peak to dark depths of Black Monday 9.47am BST Today’s European rally is good news for investors (unless they ‘shorted’ the market), but it doesn’t change the fundamental problems in the global economy.Nour Al-Hammoury, ADS’s chief market strategist, explains:We have global deflation, concerns over the strength of the Chinese economy and an overheated equity market. A single intervention by any of the Central Banks is now likely to be of little use – there will need to be a coordinated response. 9.42am BST Wall Street is expected to bounce back when trading begins in five hours time, after suffering its biggest falls in four years. 9.30am BST It’s no wonder that investors in Beijing are rattled. They’re experiencing a wickedly volatile market, with shares tumbling sharply since hitting a record high in June.Shanghai Index: 4 of the biggest 10 daily falls in last 15 yrs have occurred in the last 2 months #greatfallofchina pic.twitter.com/nbUxiFOjcr 9.19am BST City investors are ‘picking up the pieces’ after yesterday’s tumble, says Connor Campbell of SpreadEX, as European indices jump more than 2%.The Chinese central bank remains a bungling bit-player in this nightmare, instead of the reassuring white knight the markets need it to be, something that could cause losses to return if the same price-eroding fears over the bank’s ineffectualness begin to creep in once again. 9.12am BST Greece’s stock market is joining the rally, up more than 5% after a nasty tumble yesterday:#Greece stock market rebounds 5.3% today after a nosedive by 10.5% on Mon. #economy #markets #stocks 9.03am BST European stock markets are pushing higher, as Black Monday turns into Turnaround Tuesday.Eu200b so far added back to European #stocks this morning...still Eu300b to go to make up for yesterday's rout... 8.42am BST My colleague Fergus Ryan is in a trading room in Beijing, where small investors are shell-shocked as they watched share prices tumble again today.Fergus writes that many traders were intensely focussed on what no doubt were their plummeting fortunes.“Don’t bother me, I’m trying to focus”.“I lived through wars, but nothing as horrible as this.”.“The Communist party is awful, all my money is gone”.... 8.41am BST Shanghai Comp has closed lower by 7.6% today after falling by 8.5% yday. pic.twitter.com/hCUlQxuUIo 8.29am BST China’s stock market has crashed to its lowest level since December 2014, in a fresh wave of panic selling. “The mood of panic is dominating the market ... And I don’t see any signs of meaningful government intervention.” 8.17am BST The bottom line: there was no reason for China's stocks to go up, so now there's no reason for them to stop going down. 8.14am BST Banks and mining giants are dominating the top risers on the FTSE 100 in early trading: 8.05am BST Here we go again....Steep slides in equity markets and fears of a China-led slowdown in emerging economies are upending hopes in much of Europe that strong global growth and a weak euro would boost the region’s limp recovery. 7.56am BST European stock markets open in a few minutes.The FTSE 100 is expected to rally, after shedding 288 points yesterday in its biggest one-day slump since 2009.FTSE100 being forecast to open +75 at 5974. 7.46am BST China’s benchmark stock market is being dragged deeper and deeper down, wiping 7.5% off the Shanghai composite index as more traders throw in the towel.Almost every share price has been hit today: 7.41am BST “The recent turmoil has left even the most hardened trader gasping for air. And there’s probably more to come.”So warns Frederic Neumann, HSBC’s co-head of Asian economics research, in a note to clients.That puts further cracks into the two main growth pillars for the world economy of recent years: Chinese demand (including commodities) and easy money,” 7.37am BST Today’s rout across the China markets shows that traders realise Beijing won’t, or simply can’t, prop up share prices.“It’s panic selling and an issue of confidence,” Wei Wei, an analyst at Huaxi Securities Co. in Shanghai, told Bloomberg.“The government won’t step in to rescue the market again as it’s a global sell-off and it’s spreading everywhere now. It’s not going to work this time.” 7.31am BST It’s all looking rather ugly on the Chinese markets right now, as the stock market suffers more heavy losses.The Shanghai Composite index just fell through the 3,000 point mark for the first time since December 2014, as another wave of selling rips through the country’s brokerages.BREAKING: Bye-bye! Shanghai benchmark index sinking nearly 7%, breaking psychologically important 3,000 points level pic.twitter.com/1YvVR4JhWF 7.26am BST The Australian market has closed up. The main S&P ASX200 benchmark finished 2.42% higher at 5,122.4 driven by the financial sector.As Angus Nicholson at IG put it, the bargains were just too good to resist.The buying opportunities in the ASX today were clearly far too tempting. Banks led the rise today, with the sector up over 4%. 7.16am BST Ouch. Japan’s main stock index, the Nikkei, has just closed at its lowest level in six months, shedding almost 4%.Just two hours ago, the Nikkei was up 1%, before worries swept the Asian markets again. 7.07am BST Martin Farrer in Sydney handing over to Grame Wearden in London. Thanks for joining me. 7.00am BST The rout is gathering pace again.The Shanghai Comp is down more than 6% while the Nikkei in Tokyo and the Hang Seng are also down in a wave of selling since the Chinese markets reopened after lunch. 6.59am BST After a volatile session, the main Asian markets are suffering a late selloff.The Shanghai Composite index is now down by over 6%, with an hour’s trading to go. Here we go again, Shanghai Comp. down over 6.2%.... Just 6 points above 3,000 now #ChinaMeltdown #ChinaMarkets pic.twitter.com/jdYQWzLpsZ 6.51am BST Angus Nicholson at IG Markets in Sydney thinks we might be seeing some more realistic valuations in the Chinese markets, which is why they’re lagging so much.He thinks the authorities – what he calls the National Team – have decided to step back from interventions in the wake of a recent meeting of senior leaders at Beidaihe He writes:Asian stocks obtained some respite after yesterday’s brutal sell off. Chinese stocks continued their declines, initially opening down over 6%, paring this back to 2.8%, then pushing back to a 4% decline.What is increasingly clear is that the “National Team”, the China Securities Finance Corporation (CSFC), have stopped their daily interventions. The post-Beidaihe consensus appears to be that this was costing the government too much money. Thus, the rallies we are seeing in Chinese markets may have more to do with better valuations than government intervention. 6.46am BST Tricky business this. I’m watching Bloomberg TV here in the office and the Shanghai Comp is moving downwards at a rapid rate of knots to – it’s down 5.47% now.Other Asian bourses are being dragged down too – Tokyo, Hong Kong both in the red. 6.34am BST The Australian market has performed the strongest today. CMC Markets chief strategist in Australia Michael McCarthy said:It is too early to say we are out of the woods. We might see a significant rally and a further significant sell-off. But, at the very least, we have seen a circuit breaker in that sour sentiment, and that should see markets in this region stabilise. 6.24am BST If you’re just waking up in Europe – or wherever else for that matter – it has been a volatile day of trading on Asia Pacific markets.Stock markets fell quite sharply at the opening this morning but – with the exception of the Chinese bourses despite a $24bn injection from the central bank – recovered strongly. 6.06am BST For slightly more on this, the Guardian’s Larry Elliott has written about how the selling on Monday showed what markets can look like when the stimulants – in the form of quantitative easing – wear off.Larry writes:Financial markets have gone cold turkey. For the past seven years, they have been given regular doses of strong and dangerous narcotics. The threat that the drugs will no longer be available has resulted in severe withdrawal symptoms ...On the day that QE was launched in the UK, 9 March 2009, the FTSE 100 stood at 3,542 points. Its recent peak on 27 April this year was 7,103 points, a gain of 100.5%. There is a similar correlation between the three rounds of QE in the US and the performance of the S&P 500, which was up more than 200% during the same period. Related: China stock market panic shows what happens when stimulants wear off 6.02am BST Michael Hewson of CMC Markets in London is another who thinks this is a correction that is overdue rather than the harbinger of global meltdown. He thinks today may see a let up in the selling of recent days.While the moves in recent days have been quite alarming in their volatility when one looks back at the performance of stock markets over the last six years, perhaps the recent declines are long overdue.For the last six years investors have been spoilt by central bankers who have been extraordinarily successful in pushing stock markets to record highs with the use of large scale loose monetary policy, while the Chinese economy has been growing at a fairly decent clip. 5.52am BST Back to commodities and they’ve made a decent recovery today with the oil benchmarks up slightly.US crude was up to $38.67 after closing at $38.24 a barrel in New York on Monday night, its first below-$40 close since February 2009. 5.42am BST And bullish investor sentiment from the Mayne man. 5.41am BST Trading in China and Hong Kong has stopped for lunch so things are quite calm. Seems like a good time to look at more reaction to what’’s been going on. The consensus is definitely towards the view that other markets are decoupling from any China contagion. The current panic is essentially ‘made in China’. The recent data from other major economies have generally been good and there is little to justify fears of a major global downturn.China’s recent economic data suggest that growth remains sluggish, but are not weak enough to justify fears of a hard landing. 5.16am BST Having said that, the S&P VIX volatility index, otherwise known as the Fear Index, is heading north again – a bad sign.As my colleague Graeme Wearden explained yesterday, “the VIX tracks the prices of options on the S&P 500, which are often used to hedge against potential losses. So a jump in the VIX shows that investors are getting scared...” 5.05am BST US futures are helping the market bounce back. The US market is headed for a 2% rise at the opening on Tuesday which has breathed life back into Asia today. 4.57am BST 4.54am BST 4.48am BST Bargain hunting looks like it has helped lift Asian shares.The MSCI’s broadest index of Asia-Pacific shares outside Japan is up 1.7% after an initial dip to three-year lows, and Japan’s Nikkei index also erased most of its early losses after an initial drop of 4.3%. It’s currently up 1.1%.There appears to be buyback as many markets look oversold after panicky selling in the last few days. Even the shares that had little business ties with China were sold. 4.38am BST Morgan Stanley says shares in Australia’s banks have further to fall despite the rally today. The banks have seen record profits on the back of the booming housing market in Sydney and Melbourne, but some observers believe they are overpriced even after the recent falls. 4.30am BST And here is Stephen’s piece. So much going on today that I missed it launching a few minutes ago ... Related: Searching questions for Tony Abbott if turmoil on stock markets gets worse 4.29am BST One of our roving economics commentators, Stephen Koukoulas, has been looking at the market turbulence.His analysis will be online shortly but here is a taster:The savage market ructions of recent weeks and days are disconcerting. While not unprecedented, the quite staggering fall in share markets and commodity prices are threatening to undermine the global economy.For Australia, the news is particularly alarming. Australia’s stock market has not performed well in recent years, lagging well behind the other markets. If the market ructions translate to an extended period of weak global growth, Australia’s already dismal export performance will be hampered and the commodity price weakness will further undermine national incomes. 4.25am BST Here’s our first news take on the story today from our correspondent in Tokyo, Justin McCurry. Related: Asian stock markets swing wildly as Chinese shares take another battering 4.22am BST Tony Abbott, the Australian prime minister, has become the latest politician to have his say. Not surprisingly, he is adopting the “nothing to see here” approach.He has urged Australians not to “hyperventilate” over the slump on global share markets after receiving a briefing from the Reserve Bank governor, Glenn Stevens, and senior officials on Tuesday morning.I think it’s important that people don’t hyperventilate about these type of things. While the Chinese economy is slowing, the rest of the world economy does appear to be picking up. America is growing, not spectacularly but steadily. Europe certainly seems to have turned the corner ... and here in Australia, our fundamentals are strong. 4.18am BST It’s been a much better day so far with the major markets – except China – back in positive territory.Here are the main points: 4.16am BST Goldman Sachs has moved in to steady the ship. The global economy is not at risk of a recession, it says. Thanks to Reuters, here is what Goldman’s experts said in a note to clients:The drop in commodity prices during the past year and recent economic and foreign exchange weakness in China and other emerging markets will not tip the global economy into recession.We see a meaningful risk that markets are overinterpreting the collapse of oil and commodity prices as a negative growth signal. The fall in prices of oil and other commodities are primarily a reflection of excess supply rather than weak demand. 3.53am BST On the sea of red v sea of green debate, the answer is, of course, that red is an auspicious colour in Chinese culture, indicating wealth. Thanks to Tom Phillips, our man in Beijing. 3.30am BST Things are still improving on the main indices. Even the Nikkei has returned to positive territory, up slightly by 0.12%.And yet, sentiment remains quite negative in Shanghai, where the Composite Index is still off 4.6%.Global investors are cannibalising each other. Calling it a market disaster is not an overstatement. The mood of panic is dominating the market ... And I don’t see any signs of meaningful government intervention. 3.22am BST Bear or bull? A good up-summing of the market dilemma by the Australian stock exchange’s chief, Elmer Funke Kupper.There are two schools of thought. One is this is a correction that was probably a little bit overdue. There is another school of thought that says maybe the world economy is not recovering quite as well as everybody had been thinking and therefore we’re more into bear territory.It all depends on your personal circumstances. For some people these corrections are a fantastic buying opportunity. 3.16am BST Looking much better now for the markets. 3.09am BST You have to laugh ... This from the Onion.And by the way, you have to remember that falling stocks appear in green in China, not red as commonly used in western markets. I’m hoping someone can give a full explanation of why this is. 3.00am BST The Japanese are talking tough on the ugly (for them anyway) side-effect of the China situation, namely that the yen has gone back to seven-month highs as investors seek a safe haven.We’ve now got some more intelligible quotes from the Japanese finance minister, Taro Aso, who warned market players against pushing up the yen too much further as the currency experienced “rough”.I would say they are rough, rather than rapid. For the economy to grow stably, it’s better for [currency and stock price] moves to be gradual and steady, rather than rough. 2.51am BST It’s going to be difficult to see where markets are going to end up today.On the up side we have: 2.42am BST The Shanghai Composite index lost 6.4% to 3,004.13 points at the opening a few minutes ago after yesterday’s near-9% plunge sparked another global rout.The CSI300 index was also down 6.3% at 3,070.01 points. The central bank made a large 150bn yuan ($23.43bn) injection into the interbank market on Tuesday morning during open market operations. However, similarly large injections last week had little impact on stock market sentiment as the funds remain in the market for only seven days. 2.31am BST Back to stocks and some good news. Australian shares have continued to bounce back. 2.24am BST We haven’t looked at commodities yet this morning, so here goes. It’s looking slightly better with US crude up slightly at US$38.38 a barrel, although the US benchmark and Brent are still sitting on six-year lows. 2.21am BST But it’s by no means certain. If this is just a correction – as Joe Hockey said this morning – then there’s nothing to worry about and the Fed should go right on ahead, shouldn’t it? Toru Yamamoto, chief bond strategist at Daiwa Securities, said today:There seems to be no consensus with the Fed on whether they are worried about acting too prematurely or too late.The ferocity behind the selling is there for everyone to see and there is an all-out liquidation of equity holding. Clearly, the Federal Reserve are not going to hike rates in September and the market is now placing a 20% probability on this fate. Still, we are going to need to see something more inspiring than the Fed holding-off on hiking rates. The mere fact they are having to hold off is bearish in itself, but we need to see something coordinated and specifically coming from Asia given this is where the concern is stemming from.China failed to cut reserve ratio requirements (RRR) over the weekend and this has hurt sentiment and cutting this ratio is a measure designed to fight fires; this alone is not going to significantly reverse sentiment. 2.13am BST It looks like a lot of volatility until the China market opens. Until then, perhaps we should have a quick look at the bigger picture, namely whether or not this market correction (let’s stick with that before we call it a crisis, or even a crash) means that the US Federal Reserve will still raise rates, as has been widely expected for months.A former US treasury secretary, Lawrence Summers, is in no doubt, saying raising rates soon would be a “serious error”. He said in an opinion piece for the Wall Street Journal:A reasonable assessment of current conditions suggests that raising rates in the near future would be a serious error that would threaten all three of the Fed’s major objectives: price stability, full employment and financial stability. 2.04am BST The ASX200 has gone into positive territory for the day helped by investors buying up bank stocks. 1.48am BST Now it’s the turn of Japan’s economics minister Akira Amari. As we reported just a little earlier, investors are buying the yen as a safe-haven asset, bossting it to a seven-month high against the US dollar, which is not really what PM Shinzo Abe wants to happen.However, Amari is putting some heroic spin on it. He says the buying shows Japan’s economic fundamentals are strong, Reuters reports. A bubble had formed in China’s stock market and that stock prices are now adjusting lower, he said. 1.39am BST The fightback is definitely on this morning. The ASX200 is now up 0.4%.The Nikkei is still getting hammered though. Down 3.57% now. 1.36am BST The Japanese finance minister Taro Aso has urged China to do something to stop the bleeding. Hope Chinese authorities take appropriate action to stabilise economy, which has big impact on global growth.Recent yen moves are rough, rather than rapid. 1.26am BST But check this out. The Kospi index in Seoul is UP UP UP. Amazing stuff – it’s risen 0.12%. The fightback starts here. 1.26am BST The Nikkei in Japan is down around 2%. 1.21am BST Or is the ASX rallying? 1.16am BST More on Australia, where the exposure to China is acute. 1.14am BST ASX200 is tanking again in Australia. Now down 1.5% with all sectors taking a beating, says CommSec. 1.10am BST Kospi down a little in Seoul. 1.08am BST Not too bad in Australia – ASX200 down 0.6%. But Nikkei down 2.5% in Tokyo. 1.03am BST Tom Phillips is on deck in Beijing and he sends us this from the Global Times, a Beijing-run tabloid, which blames western doomsayers for some of the problems.There seems to be only one reason for the tumble – investors lack confidence in China’s economic outlook. The newly released economic figures do not look good. It seems that the words “misfortunes never come alone” have come true.There is no need to worry because of pessimistic voices from the outside world. China’s economy is in a bitter period of structural adjustments. We should become inured to face all sorts of problems with grace. This temporary lack of confidence will not snowball to become destructive. 1.01am BST The flip side of that is that other currencies seen as safe havens are doing much better. The yen, for example. That’s bad news for Japanese policymakers who want the yen to fall in value so its exports are cheaper. A senior Japanese government official said on Tuesday that recent exchange-rate moves “appear to be rapid” after the yen surged to a seven-month high against the dollar as investors fled risk amid a global stock market rout. Asked whether a meeting on market moves was planned on Tuesday among the ministry of finance, Bank of Japan and the financial services agency, the official told reporters: “There is no plan to hold one today.” 12.55am BST I guess Hockey’s glass half-full view will be stress-tested a fair bit in the next few days. Very exciting stuff. In the meantime, the Australian dollar – along with many other currencies exposed to the Chinese economy – is having a tough time. 12.50am BST More from Australian treasurer Joe Hockey, who says this is a correction, not a crisis.Daniel Hurst has the full story here, but here’s another snippett:He said countries did not have the same “firepower” – or the capacity to cut interest rates and engage in stimulatory spending – as they did at the onset of the global financial crisis in 2008, but added: “In fact there is no crisis now. It is a correction.”Hockey said despite the falls, the Chinese stockmarket was still 40% higher than it was 12 months ago “and there has been a lot of flighty money in the Chinese stock market, so that’s part of the equation”. 12.44am BST How the Pink Un has called it today. 12.41am BST if you’re just joining the blog and you want a ctach up on the events of the past 24 hours, here it is courtesy of my colleague Graeme Wearden 12.37am BST In Australia, the federal treasurer Joe Hockey has moved to reassure people that all’s well and that the country can withstand the market volatility. He also hinted that China will wheel out the big guns to try to stop the rot. Question is, what will they do – if anything?Anyway, my colleague Daniel Hurst will be filing soon on what Hockey has said this morning. But here’s a snippett:I’m absolutely confident, absolutely confident that the fundamentals of the Australian economy and the global economy are still good.Last week, I met with one of the most senior economic figures in China.He reassured us, from his lips to our ears, that China would use whatever tools it has available to make sure that it grows relatively strongly this year ... There is no doubt. 12.31am BST 12.27am BST The first key event of the day will be the opening across Asia and investors are expecting more steep falls. Futures are pointing to a 3.6% fall in the Australian market, taking the ASX200 well below 5,000 points.Chris Weston from IG Markets said this morning:The world’s capital markets are in meltdown, and investors are asking what can stop the panic. There is no getting away from the fact that this is going to be such a key session. Our opening call is currently 4,820, which implies a 3.6% fall. 12.23am BST Good morning and welcome to the live blog on what promises to be another exciting day on the financial markets. After wild swings on Wall Street and Europe, it will be Asia’s turn again this morning, starting with Australia, Japan, South Korea, Taiwan and Malaysia at 10am Sydney time (midnight GMT). Continue reading...
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