In this section, we cover the most important events of the week, focusing primarily on the big stories in the markets and business as well as economic news.
China’s market woes continue: Starting with what the Chinese media have dubbed ‘Black Monday’, China’s main stock market index tumbled by 8.5% and another 7% the day after, with the trigger being more data indicating a growth slowdown in China as well as news that the government had withdrawn its previous attempts to stabilise the markets. Thankfully, this turmoil did not last the entire week as the Chinese central bank cut its headline interest rate by 0.25% and the government resumed its commitment to keep the markets afloat.
Volatility in the equity markets worldwide: Nonetheless, spreading from the woes of the Chinese stock market, the VIX index, an indication of volatility in the S&P 500, spiked sharply to its highest levels since 2009. This was seen primarily on Black Monday as the Dow Jones saw a record point-drop of 1000 points at the opening bell and there were significant tumbles in all markets worldwide, with the European markets seeing their worst days in years. This pessimism did not last however because as the week drew on, these stock markets did recover.
Oil falls sharply, then recovers strongly: It was a topsy-turvy week for oil and it all started on Monday, when off the back of concerns about China, oil dropped 7% to its lowest level in 6 years, along with other commodities. Then, the losses were reversed later in the week, when oil saw its strongest two day gains in several years.
Fed plans put on ice: Prior to all the turmoil in the stock markets, September had looked like the month when the Fed would, after years of bottom-rock interest rates at 0.25%, finally raise the Fed Funds Rate. All that appears to have changed as the Fed is now worried that such a move could further destabilise markets worldwide through capital flows, further strengthen an already strong dollar and further stifle China’s economy.
Facebook reaches an unprecedented milestone: On Monday, Mark Zuckerburg announced that a record 1 billion users had logged into Facebook, implying that around 1 in 7 people around the world was using the popular social media website. This adds to more good news this year as it has seen its revenue growing by leaps and bounds.