Why this week’s market drama may be only halfway done

Andrew Lilley couldn’t quite believe what he was seeing. Like many Australian investors, traders and market watchers, the Barrenjoey interest rate strategist was glued to his screens late on Monday night before the opening bell on Wall Street.

It had been a torrid day for investors in Australia. After stewing on an ugly night on Wall Street the previous Friday, following the release of weaker-than-expected jobs numbers, the ASX 200 dropped 3.7 per cent on Monday, its worst day in four years. In Tokyo, the carnage was even bigger: the Nikkei 225 index fell 12.4 per cent, its worst day in more than three decades.