Worldwide stock markets have in the last few years enjoyed a progressive bull market. The last few months though the markets have gone up in without real regard of the real values of the companies. Investors were jumping into hot markets right and left just because they were hot. Which means many companies if not most were greatly overvalued.
So, once the correction hit China forcing investors to liquidate their positions also in other markets bringing all the stock markets down. Others blame the forex carry trade for prolonging the fall strengthening the Swiss Franc and Japanese Yen. There are banks that promote the carry trade especially one in Denmark. But I really believe that panic brings panic and that is the real reason of the sell off.
To start off the week the Chinese government announced the widening of the Yuan trading band, which again shook trading.
In my humble trading opinion, this correction should slow down and stop by next week. If, you have cash start looking for value stocks which pay dividends. There many companies that do not move that much even when stock prices drop but give dividends 4% or more.
Read more: Jittery global stock markets fall again