Drama in Wall Street: indexes erased sharp gains

After the furor over the past few days in markets, Wall Street continued today (Tuesday) to add more "fuel to the fire" when it erased sharp increases in the final minutes of trading and closed with declines. Asian stock markets ended trade today with downs and in Europe sharply rises have been recorded following the measures announced by the Central Bank of China.

China's central bank lowered one year interest lending rates today to quarter of a percentage to 4.6% and also cut back the cash reserve ratio for banks by 0.5% to increase the credit in the Chinese economy. The bank statement said the move was made to ensure liquidity in the Chinese economy and a steady growth in credit. This is the fifth time since November that China's central bank lowers interest rates in an effort to accelerate economic growth.

Earlier today the foreign Chinese government discharged $ 23.4 billion into the financial markets in another attempt to revive the Chinese economy. This is the highest amount being pumped into the Chinese market by the Central Bank since January 2014, and another attempt to intervene in the foreign exchange market in order to devalue the local currency. The Central Bank also sold government bonds totaling 60 billion Yuan (about $10 billion).

Today European indices recorded sharp gains. A positive economic data released gives a tail wind to increases, the index of the IFO survey of business sentiment in Germany rose to 108.3 points in August versus expectations of 107.5 points.

The US stock market went into correction (defined as a decrease of over 10% from the peak) for the first time since 2011, the Shanghai index today completed a drop of more than 20% in the last week alone, and 42% from its peak on June 12, and the Stoxx 600 Index in Europe dropped yesterday by 5.3% - the sharpest daily decline since the collapse in 2008.

And what do the experts say? "Our bottom line is that the world is not in a bad place today," said Bloomberg, an analyst at Credit Suisse. "The economic indicators are not bad. The question is whether you want to rush into the market right now or wait a little longer until things calm down." On the other hand, there are also quite a few experts who estimate that the amendment is still in progress:

On the macro level, the United States released a series of data today. At 16: 00 pm the Case-Shiller index of house prices in 20 major cities was published, which rose by 1% in June, and at an annual rate of 5%, which was below market expectations at 5.1%. San Francisco, Denver and Dallas recorded the highest price increases. Seasonally-adjusted, the index declined in June by 0.1%.

At 16: 45pm, the PMI service sector index was published, which recorded a reading of 55.2 points in August from a reading of 55.7 points in July. The market expected a reading of 54.2 points in August.

At 17: 00 the consumer confidence index was released, which jumped in August to 101.5 points, while the market expectation was for a reading of 92.8 points after a reading of 91 points in July. At the same time, new home sales were released, which totaled 507 thousand at annual level, while the expectation was a higher sales rate of 512 thousand.

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