Why global markets staged a big selloff, in 7 charts

Trading screens all over the world showed a sea of red Friday as a global selloff caps an otherwise calm week. From China, to Europe, to the U.S. Market watchers have attributed at least some of the carnage to a combination of Greek default fears, irrational exuberance in China, and a meltdown of the ubiquitous Bloomberg terminals favored by traders and Wall Street bankers. Here are some charts that show the extent of the damage:

China’s main stock market – the Shanghai Composite Index surged more than 14% so far this month and more than doubled in the past 12 months. This kind of performance has been worrying authorities for a while and on Friday they acted to rein the soaring market.

The announcement of new rules that put a limit on margin trading, along with allowing short selling — bets that stocks will fall in value —on two main stock exchanges had an immediate impact. The H-Shares index futures quickly sold off, falling more than 5% after the announcement that came in after regular markets closed.

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Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.