European markets slumped Monday amid a sharp sell-off in Chinese stocks and heightened geopolitical tensions between Iran and Saudi Arabia.They keep trying to sell the lie that all is well with the economy. They keep failing.
The pan-European STOXX 600 was down over 2.4 percent with Germany's DAX down over 3 percent.
Investors reacted to weak sentiment from China on the first day of trading of the new year. China's Shanghai Composite tanked 6.85 percent and the Shenzhen Composite plunged 8.1 percent as investors cited a weakening yuan as well as weak manufacturing data out of China as the reason behind the sell-off. The price plunge spurred a trading halt during the afternoon session in China.
The Caixin December manufacturing Purchasing Managers' Index (PMI) was down 48.2 compared to the 48.6 in November.
Geopolitics is also weighing on sentiment. Saudi Arabia severed diplomatic ties with Iran over the weekend after Iranian protesters stormed Saudi Arabia's embassy in Tehran Sunday following Saudi Arabia's execution of Shiite cleric Nimr al-Nimr on Saturday.
And in the U.S., hawkish comments from some Federal Reserve heads are on the minds of investors as the pace of interest rate hikes remain in focus.
"Traders will have to sit tight and fasten their belts as the first trading day of this year is not starting off which they would have imagined. It is ugly out there today and you have to be careful and the fact is that the recent hawkish tone by the Fed over in the US is making investors more nervous," Naeem Aslam, chief market analyst at AvaTrade said in a note on Monday.
The only thing you really need to know? China's stock market was down 7%!