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Traders show greater calm following panic

FTSE 100 rallies after rout on China economy fears

stock marketThe FTSE 100 rallied after yesterday’s rout, trading up 182.47 points, or 3.1%, to 6,081.34, its biggest one-day rise since 2011 after China cut interest rates to calm markets following turbulence that has rocked equities around the world.

Investors appeared to show some calm after Monday’s panic which saw the index close 4.67% lower at 5,898.87, its lowest for two and a half years.

The slump followed an 8% crash in the Shanghai Composite on Monday, causing other stock markets to follow suit on fears that the Chinese economy was slowing.

However, experts have noted that the slowdown follows rapid growth and is more of a correction than a crisis.

However, authorities in China seem unable to stem losses with China’s benchmark index losing another 7.6%, falling under its 3,000 mark, seen as a psychological barrier, for the first time in 2015. In Japan, the Nikkei dropped almost 4%.

Piotr Matys, analyst at Rabobank, said that the day was one of the worst trading days in the history of financial markets. “The 8.5% fall in China’s stocks triggered a domino effect as most of European indexes ended Monday’s session with losses exceeding 5%.”

The euro traded high against the US Dollar as well as the pound.

Although many markets show signs of recovering, Matys warned that the decline in Shanghai might spark another fall.

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