£74bn wiped off value of FTSE as shares panic sends markets into a tailspin

Shares plunged across the globe on Monday as dealers were gripped with panic over the faltering Chinese economy. Many stocks slipped to their lowest levels in several years, while oil prices also tumbled to a six-year low at under $40 a barrel. About £74bn was wiped off the value of shares in Britain as the FTSE closed under 6,000 for the first time since 2013. Major markets in France, Italy and Germany were similarly devastated with falls of at least 3%. Things began badly on Wall Street where the Dow Jones opened nearly 6% down and below 16,000 for the first time since February 2014. Reacting to the crisis, Chancellor Gordon Brown said: “I would take it as a reminder that we are not immune from what happens in the world. It’s all the more reason why countries like Britain and indeed Finland need to get their own house in order. You don’t know where the next crisis is coming from, you don’t know where the next shock is going to come from in the world.”

Markets are panicking. Things are starting look like the Asian financial crisis in the late 1990s. Speculators are selling assets that seem the most vulnerable

Takako Masai, Shinsei Bank, Tokyo

The sell-off continued despite China’s latest attempts to reassure investors. At the weekend, Beijing said it planned to let its main state pension fund invest in the stock market. Monday’s carnage began in the Asian markets, where the Shanghai composite index closed 8.5% down and Hong Kong’s Hang Seng index ended 5.2% down. Analysts have called the falls a “necessary adjustment” and a “reality check” and say it was clear it was time for the shares bubble to burst. Experts saw little respite in the days ahead, with predictions that it could be some weeks before bargain hunters came in with cash to lift stock prices again. "There is a snowball effect happening,“ said Mark Ward, head of execution trading at Sanlam Securities. "Every order has been a sell today, across the board, so clearly people think we haven’t hit the bottom yet.”

Globally we see a massive panic and exit of capital out of emerging markets …. [they] are dropping like a stone

Bernd Berg, director at Societe Generale

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