Chinese index plunge drags global equities lower

The Chinese stock market fall of 8.5% in one session has hit market sentiment on equities around the world.

Chinese index plunge drags global equities lower

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Germany’s DAX index was down 1.4% by late morning to 11,190, while France’s CAC 40 was off a similar amount to 4987, and Spain’s IBEX 35 was down 0.75% to 11,227.

The FTSE 100 fell at the opening before regaining most of that ground to be only 10 points lower at 6570.

The fall in the Shanghai Composite Index represents the biggest one-day drop seen there since February 2007.

The index is now 28% lower than the peak recorded 12 June before the first major slide this year.

It is however still comfortably up on where it started the year, so for some the situation is not as bad as the headlines may suggest.

“The Chinese stock market has suffered one of its blackest days ever, vividly demonstrating that what goes up fast tends to come down at a similar pace,” said Laith Khalaf, senior analyst at Hargreaves Lansdown.

“While this was one of worst days ever for Chinese stocks, it is important to maintain some measure of perspective. Despite the recent sell-off, the Shanghai index is still 11% higher than when it started the year,” Khalaf said.

“This tells us how far the Chinese stock market has come in such a little space of time. On the back of such stellar performance it is natural for the market to come back down to earth.”

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