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.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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