The new “circuit breaker” rule that suspended trading nationwide for the first time on Monday was created after sharp falls last summer and was meant to curb market volatility in China. It was still its worst post-New Year performance in eight years.
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France’s CAC40 was up 0.15 per cent; London’s FTSE closed 0.55 per cent in the black, while Germany’s DAX recovered from a major sell-off on Monday to close up 0.03 per cent.
According to Goldman Sachs, China’s Monday selloff was brought on by several other factors which included increased market concerns over near-term liquidity, capital outflows, monetary tightening and inactive policy stimulus.
Panic selling on Monday, mostly by China’s army of small retail investors, sent shares diving 7%, setting off a worldwide reaction and pushing MSCI’s global index 2% lower.
Two regulatory actions in China are behind the bear markets.
Sanjiv Shah, chief investment officer at Sun Global Investments, said Beijing’s latest attempts to steady its equity and currency markets reflected the depth of the concerns rippling across world markets.
Stocks in Europe were flat in early trade, with the Stoxx Europe 600 index erasing opening gains.
Tensions in the Middle East also flared up after one of the largest state executions in Saudi Arabia sparked a row with Iran.
Crude oil prices were volatile.
In fact, on Monday, when stocks tanked, the plunge was first set off by the release of a weak Purchasing Managers’ Index for the country, with a reading below 50, meaning that manufacturing activity would be poor in the near future.
USA automakers are scheduled to report December sales figures on Tuesday, with estimates pointing to a decline to 18.10 million units from 18.19 million units in November.
German and French stocks were down 0.6 percent after opening around 1 percent higher while Britain’s FTSE 100 index was down 0.1 percent.
Hong Kong’s Hang Seng Index closed down 0.65 per cent; the Shenzen composite fell 1.86 per cent.
Shares of gun makers rose as U.S. President Barack Obama announced tighter gun-control measures, which could encourage consumers to buy before the measures take effect, analysts said.
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Gold prices were up 0.2% at $1,077.70.
