American investors are bracing for a volatile day of trading as a drop in crude oil prices sent China’s largest stock index plummeting overnight to 14-month lows.
Traders panicked in China as the Shanghai Composite Index fell 6.4 percent. Brent Crude fell in early trading Tuesday back below $30 a barrel before recovering slightly to $30.33, reports USA Today. China’s equivalent to the Dow Jones Industrial Average, the Shanghai Shenzhen 300 Index, also deteriorated to its lowest point in more than a year.
“It’s just another in a long series of slumps that we have seen in this market, and it’s not the last we will see either because the market is still overpriced,” Michael Every, head of Financial Markets Research, Asia Pacific, at Rabobank told USA Today. “Too many people want to get their money out. It’s been a bubble since it began last summer.”
Fear of further currency devaluation in China partially drove the overnight downturn, as traders struggle to anticipate what the government will do next. Chinese stocks have now lost 22 percent on the year as fears that the global economy is slowing permeate their markets, reports The Wall Street Journal.
U.S. stock futures are up, however traders are bracing for an unpredictable day of trading. China’s market troubles have spread into the U.S. indices throughout all their declines since the beginning of 2016, reports The Wall Street Journal.
John Manley, chief equity strategist for Wells Fargo Funds Management told The Wall Street Journal, “People are scared to death about China.”
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