China's Economic Woes Send Global Stocks Tumbling as Crude Oil Prices Drop
Soon after China announced that it would depreciate its currency to boost its economy, global markets took a steep dive last week as signs of weaknes hit both Chinese and global stock markets.
According to CTV News, the United States stock market had their worst week since 2011 after a sell-off that marked concerns over China's economic downturn. Despite healthy U.S. employment reports on Friday, most companies that transact business with and in China plummeted. These included companies like Apple, Boeing and miners, especially those that supply China with copper and minerals.
In China, trading of shares was suspended twice last week after a significant seven percent plunge on the key index. Chinese stocks rebounded on Friday, with analysts suggesting that it resulted from purchase by a "National Team," a term given to a group of state entities charged with the responsibility to shore up share prices. This phenomenon was the main source of global shockwaves that pushed down the prices of goods.
"Risk sentiment continues to weaken even as recovery in U.S. employment market remains robust," economist from Citigroup said. "It is important for investor sentiment that activity data from China delivers to market expectations. Downside surprise may further destabilize sentiment and add to concerns caused by volatility in renminbi and Chinese equities."
As China continues to hammer down the stock market, price for crude oil also made significant drop, the Independent Record reported.
Crude oil prices slid down to nearly $32 per barrel last week, which is the lowest price observed in nearly a dozen years. .
Besides the crude oil market, one of the most notably affected markets was copper, where a single pound was sold for only $1.99. Meanwhile, agricultural products from the United States have also come under pressure amid economic concerns, such as corn, of which China is a major consumer.
John Canally, chief economic strategist from LPL Financial, said, "China's been such a big driver of global growth for 15 years and now they're not, and they don't seem to have a plan for the next 15 years."