Five Charts That Prove This Selloff Is Serious

Stock markets around the world seem to be already in confirmed selloff territory or very close to it.

Here, we take a look at some key charts which demonstrate why this pessimistic mood looks set to continue.

Shanghai Composite Index over 3 months

Was this where it all began? China’s benchmark index is one of the worst-hit of the major global equity markets. While the roots of the current selloff may be deep, much of the pile-in panic seems to have been sparked by fears that China’s economy, the second-largest in the world, is not going to deliver the growth figures once hoped for.

The Chinese central bank’s devaluation of the yuan earlier this month, as it suggested that the country needed to boost its exports, caused some of the more serious concerns to crystallize. While it was aimed at stabilization, the performance of the country’s main stock market index since then suggests this has not yet been achieved.

US dollar index last week

This chart illustrates how other major currencies are weighted against the U.S. dollar – and can be used as a forward indicator of U.S. trade with other countries.

The slump in other currencies against the U.S. dollar is motivated both by fears of a currency war, where countries become locked in a competition to devalue their currencies in an effort to boost exports, and about whether the U.S. Federal Reserve will start raising interest rates in September, as many expected.


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.