Market slump extends as China fears punish global equities

US markets are expected once again to open considerably lower today and remain under pressure as trading commences. Equity losses have slumped even further throughout Asia and European trading, with losses in the China markets being so extreme that trading was even suspended for the second time this week. Fears over another abrupt round of the China economy slowing down have resumed with this including another unexpected currency devaluation by the PBoC this morning at the fastest pace since the shock in August 2015, which has also weighed on global sentiment.

Market participants in general are remaining very jittery,with the concerns over China, increased geo-political tensions elsewhere, depressed commodity markets and anxiety over the general pace of growth in the global economy encouraging investors to scatter away from riskier assets. All in all, this is a horrible mixture of different concerns for stock markets to handle. With the persistent and continued weakness in the commodity markets weighing heavily on investor sentiment, we are not surprised that the global equities have resumed their steep losses and we still see the potential for further declines.

Speaking of commodities, WTI oil has descended to another fresh 12 year low and visited prices it had not reached since December 2003 at $32.10 as concerns intensify over the aggressive oversupply in the markets. The growing tensions between Iran and Saudi Arabia have diminished any hopes that OPEC members may agree on a production cut and this has further repelled investor attraction towards oil. Recent reports from the Energy Information Administration (EIA) showing the sharp rise in U.S. gasoline stocks have reinforced the fears over the unrelenting oversupply while traders have begun to lose patience with the declining oil rig counts which have failed to quell the consistent rise in crude stock piles.

WTI Oil is heavily depressed and evidence of slowing growth in China which has fed fears of a decline in global demand may encourage bearish investors to send prices towards $32.