The 2015–2016 stock market selloff was the period of decline in the value of stock prices globally that occurred between June 2015 to June 2016. It included the 2015–2016 Chinese stock market turbulence, in which the SSE Composite Index fell 43% in just over two months between June 2015 and August 2015, which culminated in the devaluation of the yuan. Investors sold shares globally as a result of slowing growth in the GDP of China, a fall in petroleum prices, the Greek debt default in June 2015, the effects of the end of quantitative easing in the United States in October 2014, a sharp rise in bond yields in early 2016, and finally, in June 2016, the 2016 United Kingdom European Union membership referendum, in which Brexit was voted upon.
By July 2016, the Dow Jones Industrial Average (DJIA) recovered and achieved record highs. The FTSE 100 Index did not do so until later in 2016.
Stock market performance in mid-2015 The DJIA closed at a record 18,312 on May 19, 2015, before slowly falling to a low of 17,504 and then partially recovering to its secondary closing peak of 18,102 on July 16.
The stock market slowly slid thereafter, reaching a low of 17,403. The NASDAQ Composite peaked on July 17, 2015, at 5,219. Apple Inc.'s stock peaked at $133.00 on February 20, 2015, reached $132.37 on July 20, 2015, and slid to $105 by August 21, 2015.
The downturns Initial decline and bounce back in 2015 On August 18, 2015, the Dow Jones Industrial Average (DJIA) fell 33 points. On August 19, 2015, it lost 0.93% and on August 20, 2015, it lost 2.06%. A steep selloff then occurred on August 21, 2015, when the DJIA fell 531 points (3.12%), bringing the 3-day loss to 1,300 points.
On Monday, August 24, world stock markets were down substantially, wiping out all gains made in 2015, with interlinked drops in commodities such as oil, which hit a six-year price low, copper, and most of Asian currencies, but the Japanese Yen, losing value against the United States Dollar. With the stock market plunge on Monday, an estimated ten trillion dollars had been wiped off the books on global markets since June 3.
The 8% drop in China on August 24 was termed "Black Monday" by the Chinese state media. The term gained wide usage in the next 48 hours.
In India, the Sensex recorded its biggest single-day fall of 1,624.51 points on August 24, ending the day down 5.94%. Indian investors registered losses worth over 7 lakh crore ().
In Europe, the main stock markets dropped at least 3% on August 24. The FTSE lost -4.4% (£78bn) but upon opening on August 25, shot up 116 points (1.97%).
The DJIA opened 1,000 points lower on August 24, but gained nearly half of it back in the first 30 minutes. The New York Times used the term "upheaval" to describe the market situation. It remained down 588 points at the close of trading. Hedge funds, which, for the most part, had long positions on the eve of the downturn, suffered substantial losses as stocks such as Apple, Citigroup, Facebook and Amazon lost value. The BSE SENSEX fell 1,600 points on August 24 as the rupee fell to 66.69 per dollar.
Tuesday, August 25, was another day of sharp losses on the SSE Composite Index, which dropped 7.6%, making a 40% downturn in the market since June. The two day loss for the SSE Composite Index was over 15%.
Meanwhile, Asian and European markets finished higher, and the day began with a major 440 point upsurge for the DJIA; however, the gains turned to losses, with the DJIA plunging in the final hour to lose over 200 points for the day (1.3%).
On Wednesday, August 26, 2015, the SSE Composite Index swung widely and ended down another 1.3%. This was in spite of a cut in the borrowing rate in China. Late the previous day, it was announced that the Chinese legal authorities were investigating Citic Securities, the largest brokerage in the country, for possible illegal securities trading. In addition to eight executives at the firm under scrutiny, a news reporter and members of the China Securities Regulatory Commission were reportedly taken into custody.
On August 26, the U.S. markets rallied, with the three major indexes, the DJIA, NASDAQ Composite, and the S&P 500 Index all registering gains of about 4%. It was the 3rd largest point gain on the list of largest daily changes in the Dow Jones Industrial Average. The DJIA rose another 319 points the next day, causing the aforementioned record to be set.
Subsequent volatility in 2015 On the following Tuesday, September 1, the SSE Composite Index declined 1.23%, Britain's FTSE dropped 3%, and the German DAX index declined 2.4%. In the U.S, the DJIA dropped to 16,058.35 points (2.8%) and the Nasdaq Composite fell 140.40 (2.9%). Most markets recovered the day after.
On September 18, 2015, the Federal Reserve did not raise interest rates at its meeting. On that day, after a multi-week recovery in which the DJIA had recovered to 16,700, the DJIA plunged 290 points. The Nasdaq Composite fell 70 points, the FTSE 100 fell 65 points and the Nikkei 225 fell 362 points. World stock markets continued to fall in late September, with the DJIA down to 16,004 by September 29, 2015. This, coupled with other stocks (FTSE100, Hang Seng Index, Nikkei) falling the same or more, set the stage for billions to be lost.
Stock market performance on January 20, 2016 widely attributed to low oil value On January 20, 2016, due to crude oil falling below $27 a barrel, the DJIA closed down 249 points after falling 565 points intraday. The FTSE 100 fell 3.62% in a single day and entered bear market territory.
Stock market performance in February 2016 as a result of Brexit vote announcement
In February 2016, British Prime Minister David Cameron announced that the Government was to recommend that the UK should remain in the EU and that the referendum would be held on 23 June, marking the official launch of the campaign. He also announced that Parliament would enact secondary legislation relating to the European Union Referendum Act 2015 on 22 February. With the official launch, ministers of the UK Government were then free to campaign on either side of the argument in a rare exception to Cabinet collective responsibility. This announcement led British pound fell to $1.393, the lowest since 2009 and lead the uncertainty in stock markets around the world.
Stock market performance in June 2016 as a result of Brexit vote
On June 14, 2016, polls showed that a vote in favor of Brexit was more likely. The FTSE 100 fell 2% and markets sold off globally. On June 20, 2016, after further polls suggested a move back towards Remain, the pound and the FTSE recovered. Global markets also recovered.
On June 22, 2016, the day of the referendum, Sterling hit a 2016 high and the FTSE 100 climbed to a 2016 high of $1.5018 and 6338.10 respectively as a new poll suggested a win for the Remain campaign. Initial results from Newcastle suggested a vote for 'remain' and the value of the pound held its value. However, when the next result for Sunderland was announced, it indicated an unexpected swing to 'leave'. Subsequent results appeared to confirm this swing and sterling fell in value to $1.3777, its lowest level since 1985. However, the following Monday when the markets opened, Sterling fell to a new low of $1.32.
When the London Stock Exchange opened on the morning of 24 June, the FTSE 100 fell from 6338.10 to 5806.13 in the first ten minutes of trading. It recovered to 6091.27 after a further 90 minutes before further recovering to 6162.97 by the end of the day's trading. When the markets reopened the Following Monday, the FTSE 100 showed a steady decline losing over 2% by mid-afternoon. Upon opening later on the Friday after the referendum, the DJIA dropped nearly 450 points or about 2½% in less than half an hour. The Associated Press called the sudden worldwide stock market decline a stock market crash. George Soros called the referendum a Black Friday for Britain.
The vote led to stock market crashes around the world. Investors in worldwide stock markets lost more than the equivalent of 2 trillion United States dollars on 24 June 2016, making it the worst single day loss in history. The market losses amounted to a total of 3 trillion US dollars by June 27, 2016. By June 29, 2016, the markets had largely recovered. Britain's sovereign debt credit rating was lowered by Standard & Poor's, as was the European Union's.
The euro fell by almost 4% against the United States dollar, while traditional "safe haven assets" such as gold and the Japanese Yen surged. Crude oil prices fell below $48 per barrel. The French CAC 40 and German DAX initially fell by over 10% upon opening, while bank shares from the two countries fell by more. Likewise, the Spanish IBEX 35, Greek ATHEX, Dutch AEX index, Czech PX Index and Polish WIG30 all fell by eight to 15 percent. The Swiss franc, a traditional save haven asset, rose sharply, thus prompting the Swiss National Bank to intervene in the foreign exchange market to cap the rise. It issued a statement that read: "Following the United Kingdom's vote to leave the European Union, the Swiss franc came under upward pressure. The Swiss National Bank has intervened in the foreign exchange market to stabilise the situation and will remain active in that market." Yields on European sovereign bonds spiked, with 10-year bonds in Spain and Italy rose as much as 0.40% in early trades. Sweden's Riksbank issued a statement that read it was "following the financial market developments closely and has a continuing dialogue with other authorities. We have contacts with the Swedish banks and other central banks. We are ready to take the necessary actions to handle financial market distortions."
By mid afternoon on June 27, 2016, the sterling was at a 31-year low, having fallen 11% in two trading days and the FTSE 100 had surrendered £85 billion. By 29 June it had recovered all its losses since the markets closed on polling day.