On Monday (24 August), global financial markets suffered heavy losses. Markets started to show weakness earlier this summer, weighed down by concerns about a slowdown of China's economy and fears of economic contagion from a potential Greek exit. On Monday morning, Chinese government efforts to inject liquidity to support the tumbling market failed. China's Shanghai Composite Stock Index closed the trading session with a record 8.5 percent loss, erasing all gains made since the start of the year. European stocks, commodities, and emerging markets were all quick to follow the Shanghai Index's lead.
The free fall was aggravated by investors' "flight to quality" and repositioning of carry-trades for major and liquid currencies like the euro and the yen. Unlike in previous years, the decline of risk assets was accompanied by the growth of such currencies as euro, British pound and Swiss franc and the depreciation of US dollar.
The US S&P 500 Stock Index tumbled 3.94 percent on Monday to close at 1893.2 points, the lowest level since November 2014 and the largest single-day and 5-day decline since 2011. Now the main question is: will the market plunge be short-lived or will the markets continue a longer-term decline?