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As China’s Market Plunge, U.S. Stocks Are Rising

( [email protected] ) Aug 25, 2015 11:58 AM EDT
The Chinese stock market plunged for a second straight day Tuesday with China main stock exchange, the Shanghai Composite Index, falling 7.6% after losing 8.5% the day before on what the media has labeled China's "Black Monday," reported BBC.
China's stocks fell for the second straight day Tuesday as U.S. futures rise. AP

The Chinese stock market plunged for a second straight day Tuesday with China main stock exchange, the Shanghai Composite Index, falling 7.6% after losing 8.5% the day before on what the media has labeled China's "Black Monday," reported BBC.

The plummeting Chinese stock market is causing panic amongst investors who expressed concern over a slowing Chinese economy and triggering a global sell-off. The sharp drop in China's stocks is the worst free-fall since the 2007 drops in the U.S. and Europe.

With the deepening market crisis, China has overtaken Greece on the top list of concerns amongst global investors. At the end of the trading day on Tuesday, the Shanghai index was down 245 points at 2,964.97.

However, across the Pacific, U.S. stock futures are on the upward trend and were trading sharply higher, indicating a higher open on Tuesday, according to TheStreet.com. Futures for the S&P 500 jumped by 3.18% in premarket trading, as the Nasdaq's futures rose 3.5% higher and Dow Jones Industrial Average futures were up 3.3%.

DoubleLine Capital's co-founder Jeffrey Gundlach told Reuters, "The U.S. stock market is in a mode of uncertainty, at best. You don't correct all of this in three days."

The report added that the Dow Jones Industrial Average posted a sharp rebound after a historic 1,000 point drop on Monday. The Dow Jones Industrial posted wild swings during the trading session before closing down 3.6% or 584 points.

The S&P 500 officially entered correction territory Monday, falling 11% from its May peak, after dropping more than 3.9% over the session. The S&P 500 and Dow are on track for their worst month since February 2009.

However, unlike the sharp drop in the Chinese market in July wherein Beijing infused hundreds of billions of dollars into the market in a desperate attempt to rescue, this time, policymakers are curiously have largely sat on their hands, Reuters said.

Zhou Lin, an analyst at Huatai Securities commented, "Global investors are cannibalizing 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."

Japanese Finance Minister Taro Aso has echoed sentiments of some industrialist who are bearish on China. Aso said the events with the Chinese stocks is a confirmation that the Chinese markets had been a bubble waiting to burst, after posting double-digit gains in the past six months.

He told reporters after emerging from a cabinet meeting in Tokyo, "There's also suspicion on whether China's official GDP figures reflect the real state of the economy."

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