OREANDA-NEWS. It was a ‘Black Monday’ for the global equity markets, with an 8.5% drop in the Shanghai Composite setting the tone as the Chinese authorities failed to ratify market expectations of either a cut in interest rates or a reduction in banks’ reserve requirements.

Elsewhere, last week’s rout intensified, with the S&P500 index plunging some 12% from this year’s high. The Dow was down 16% and the NASDAQ Biotech index dropped 18%. With the probability of a Fed rate hike diminishing, the DXY fell below its 200-day moving average and EURUSD moved up to 1.17. This move up in EUR will not be welcomed by the ECB or German exporters. JPY has been also squeezed as investors are concerned that the Fed has become boxed in and at the mercy of external events, which might postpone the timing of the fed funds rate lift. Safe haven trades also affected the US 10-year Treasury, as its yield slipped below the 2.00% level.