The U.S. blue-chip index tumbled toward its worst start to a year since 1932, while banks and technology shares led the Standard & Poor’s 500 Index lower.
Advertisement
Just after midday, Aussie stocks began to tumble, as did all other markets in the Asia-Pacific region.
Hugh Young, managing director of Aberdeen Asset Management Asia, said: “The trouble with China is it’s really still a Wild West. Yes, there are some interesting companies, but the degree of confidence one can have is not as strong as say in an OCBC or whatever happens to be on one’s own doorstep”.
As it was the first day of trading of the year it means there weren’t as many active participants in the market.
Q: What about the situation between Saudi Arabia and Iran? The S&P 500 fell 1.5 per cent and the Nasdaq finished down 2 per cent.
“The extreme reaction of investors in China… suggests that the market is highly risk averse and New Year cheer is in short supply”. BP fell 6.5 pence sterling to 347.6p, while Royal Dutch Shell was 5p lower at 1538p.
But everything depends on how Chinese markets perform today.
Early losses quickly snowballed in the afternoon, with trading suspended around 05:30 GMT, about 90 minutes before the regular close. The index ends the year in the same direction it takes on the opening day 50.6 per cent of the time, the data show.
Canadian stocks may finally be able to outperform their US peer S&P 500 for the first time since 2010 this year if the price of resources from crude to gold rebounds, Mr.Taylor said.
Focus will turn toward economic reports this week, including data on factory activity, the monthly jobs report and minutes from the Federal Reserve’s meeting that ended with the first rate increase since 2006.
The December ISM Manufacturing Index showed 48.2.
London’s top fallers were mining giants Anglo American and Glencore, which both tanked by over 5 percent each on demand fears in leading commodity consumer China.
The slide came after investors sold off Chinese equities.
In metals trading, gold rose $15 to $1,075.20 an ounce, silver lost 4 cents to $13.84 an ounce and copper fell six cents to $2.08 a pound. Earlier, crude had jumped 4 percent on Middle East tensions.
Emerging markets were especially hard-hit by the China news, with MSCI’s index tumbling 3.37 per cent, while its all-country world stock index fell 2.38 per cent.
China’s main index plunged almost 7 percent, triggering an emergency trading suspension. Julius Baer finished lower by 2.4 percent.
The latest trigger was a new manufacturing survey by Caixin that fell to 48.2 in December following two months of stabilization. Saudi Arabia, the world’s largest oil exporter, cut diplomatic ties with Iran on Sunday.
In other trading, some of the biggest decliners in the US were companies that sharply outpaced the market past year. Copper fell 1.4 percent. That would be about a 15 percent decline from Monday’s closing level.
CURRENCIES: The dollar weakened to 119.19 yen from 120.23 yen.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, climbed 0.6 percent.
Fears escalated Monday that the global economy could struggle more than expected this year – a prospect that contributed to a plunge in financial markets.
Advertisement
Benchmark German 10-year bonds opened higher, rising with European peers from Austria to France. Washington’s apparent raising of the federal funds rate also can work negatively for the global economy.
