World stock markets fell sharply again as panic selling in China has picked right back up to start the week. China's stock markets have now wiped out the gains built up during the year. The Shanghai Composite Index closed down 8.5% after the lack of an official policy move from Beijing increased the level of anxiety. Many index futures contracts in China fell by their 10% limit in an indication more selling could unwind. Europe took its cues from Asia and is lower across the board. Dow Jones and S&P 500 futures point lower by close to 2%.

Economy

China gave approval for pension funds run by local governments to invest in the stock market. The measure was approved over the weekend by the State Council. State media in China estimate close to $97B will be eligible to be invested under the new rule. Analysts also expect the People's Bank of China to lower the reserve requirement ratio by 50 basis points to 100 basis points in reaction to massive capital outflows.

Oil prices plunged to 6.5-year lows as concerns over demand from China rippled across energy markets. Brent crude is below the $45 per barrel level, while WTI crude is back into the $30s. Many industry watchers think prices will fall even further as OPEC producers continue to pour out more oil than needed. Crude futures -3.6% to $38.98/bb.

Gas prices in the U.S. remained level over the last two weeks, according to the bi-weekly Lundberg survey. Prices were 22% lower than they were for the two-week period a year ago. Significant cuts in retail prices are expected across the U.S. due to the latest developments in the oil markets.

The euro strengthened to $1.15 and the Japanese yen is also higher with traders discounting a move by the Federal Reserve to raise interest rates next month. The euro is now at its lowest level since last February.

Stocks

Caesars struck a deal with a key group of first-lien bondholders and lenders that sets it on a path to restructure the bankrupt operating division. The end game for Caesars (NASDAQ:CZR) is to remove close to $10B and reorganize with one company owning key buildings properties in a REIT and the other an operating company leasing back the casinos.

Toyota discloses it will have to close its largest source of production in China for up to two weeks due to damage from the explosion earlier this month at the Tianjin port. The local affiliate accounted for almost half of Toyota's (NYSE:TM) production in China this year. Toyota fell sharply today in Tokyo trading.

Mondelez International is playing defense after another notable activist investor revealed a sizable stake in the company. CEO Irene Rosenfeld says the company has the right recipe of growth initiatives and cost-cutting measures. The new investor, Pershing Square Capital Management, is reportedly going to push Mondelez (NASDAQ:MDLZ) to cut expenses deeper or push for a sale.

Chipotle plans to hire 4K workers on September 19 in a significant hiring binge. The job additions will increase Chipotle's (NYSE:CMG) workforce by nearly 7% as it adds new restaurants across the U.S. Employee retention is a major challenge for U.S. restaurant chains.

Confirming a speculated shuffle at China's top telecoms, China Telecom (NYSE:CHA) and China Unicom (NYSE:CHU) have swapped out chairmen, and market leader China Mobile (NYSE:CHL) gets a new chairman from the government. Shang Bing, a vice minister at China's government regulator, takes over as chairman at China Mobile, replacing retiring Xi Guohua. China Unicom's chairman Chang Xiaobing will head to China Telecom, and China Telecom's chairman Wang Xiaochu takes over at China Unicom.

Netflix announced it will partner with SoftBank (OTCPK:SFTBY) for a launch in Japan. Under the terms of the agreement, SoftBank customers can sign up for Netflix (NASDAQ:NFLX) through retail centers and online. Netflix's service in Japan will launch on September 2.

Intel is expected to announce later today that it will take a lead position in a $100M investment in Mirantis. Mirantis sells a subscription version of OpenStack to give customers a cloud computing alternative to buying products from large tech giants. Several notable venture capital firms will join the funding round with Intel (NASDAQ:INTC).

Friday's Key Earnings

Deere (NYSE:DE) -8.1% slides after cutting guidance.
Foot Locker (NYSE:FL) -3.8% despite displaying strong growth.
Spark New Zealand (OTCPK:NZTCY) +10.9% after boosting its dividend.

Today's Markets

In Asia, Japan -4.6% to 18499. Hong Kong -5.2% to 21107. China -8.5% to 3192. India -4.1% to 26155.
In Europe, at midday, London -2.6%. Paris -2.8%. Frankfurt -2.9%.
Futures at 6:20, Dow -2.1%. S&P -1.9%. Nasdaq -3.2%. Crude -3.8% to $38.91. Gold -0.1% to $1158.10.
Ten-year Treasury Yield -0.4% to 2.01%

Today's Economic Calendar

8:30 Chicago Fed National Activity Index