(Chinatopix via AP). People walk across a pedestrian bridge with an electronic display showing figures for the Shanghai, top, and Shenzhen, bottom, stock exchanges in the Lujiazui Financial Zone in Shanghai, China Thursday Jan. 7, 2016.
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This is the second time the circuit breaker has halted trading this week, after a similar plunge on Monday triggered the circuit breaker, the first day the mechanism took effect.
(AP Photo/Eugene Hoshiko). A woman is reflected on an electronic stock board of a securities firm in Tokyo, Thursday, Jan. 7, 2016.
Chinese stock investors play cards in a brokerage house in Beijing, Friday, Jan. 8, 2016. China’s stock markets have little connection to the rest of its economy but two sharp price declines this week have focused attention on the slowdown in Chinese growth.
The move unnerved investors across the region, sending other Asian markets lower and weakening the value of the Chinese yuan currency by 0.51 percent against the dollar – its lowest level since August.
In other Asian markets, Hong Kong’s Hang Seng advanced 0.6 percent to 20,453.71 and South Korea’s Kospi added 0.7 percent to 1,917.62.
Still, Japan and Europe do a lot more business in China than the USA does, and as a result, they face higher risks.
In bond markets, yields on 10-year U.S. Treasuries fell to a 2 1/2-month low of 2.119 percent US10YT=RR on Thursday and last stood at 2.17807 percent. Technology company and retailers made the largest advances.
The selloff was widespread, even hitting tech giants Apple and Amazon, which were down 4 percent and 3.7 percent respectively.
Another index, the CSI 300, fell 7.2 percent.
Shares in China rallied overnight after the country suspended a “circuit breaker” mechanism which had been created to halt volatility but appeared to backfire.
“The management of the Chinese economy is the real concern”, said John Canally, chief economic strategist at LPL Financial.
The Dow Jones industrial average lost 39 points, or 0.2 percent, to 16,475 as of 11:30 a.m. Eastern time. At one point it was down 442 points, or 2.6 percent.
The Standard & Poor’s 500 index slipped a point to 1,941.
The Nasdaq composite index lost 128 points, or 2.6 per cent, to 4707.
European markets also dropped. The FTSE 100 index of leading British shares was up 0.3 percent while Germany’s DAX rose 0.1 percent to 10,091.
But the energy sector fared better following a lift in the oil price. It sank 70 cents, or 2.1 percent, to $33.27 a barrel.
Benchmarks in Taiwan, New Zealand and Southeast Asia also fell. The NASDAQ Composite index is at 4,739 – about 2 percent lower than its opening level.
While investors should focus on China’s economy, not its turbulent equity market, the economy isn’t looking that great either.
The latest slump comes after China’s government guided the yuan sharply lower, in a sign that authorities are prepared to weaken the tightly controlled currency to boost flagging exports. Economic reports caused investors to worry about China’s manufacturing and service industries.
There are also concerns that China’s economy and stock market aren’t being properly managed. “All that matters for markets right now is ‘China can’t get their act straight'”.
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Amid hopes for a solid payrolls number and relief over the steadying of the yuan, the dollar rose more than half a percent against both the euro EUR= to $1.0878 and yen JPY= to 118.34 yen on Friday. That helped send copper producer Freeport-McMoRan down 56 cents, or 9.1 percent, to $5.61. Gap stock dropped $3.83, or 14.3 percent, to $22.91, its lowest in nearly four years.
