Over Crisis Risk China’s economy and rising bond yields led to a broad sell-off in stocks Monday, leaving the market down 5.7 percent from its all-time high last month. Markets had been gripped down by worries that a cash squeeze could threaten China’s economic growth and take a shine off the emerging US recovery. The markets rallied late in the day on hopes authorities would intervene to prevent a crisis.
The drop was prompted by a government crackdown on off-balance-sheet lending, which made investors hesitant about China’s economic growth. Then France’s benchmark stock index fell 1.7 percent, Germany’s 1.2 percent.
Ben Bernanke, the Fed chairman said that if America’s economic health improves as expected, the Fed’s asset purchases would be scaled back later this year and end completely next summer reportedly.
“European share markets are rebounding this Tuesday morning, shrugging off declines in overseas markets,” said Ishaq Siddiqi of ETX Capital.
“The risk-tone has improved somewhat after Dallas Federal Reserve head Fisher attempted to downplay the markets’ reaction to central bank tapering saying was overdone.”