Oil prices plunged below $34 a barrel – the lowest settle since 2008.
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The circuit breaker announcement followed a string of ill-fated moves by China to curb volatility on its stock markets and shore up faltering economic growth. A monthly survey of China’s service industries slipped to a 17-month low. Beijing keeps its markets sealed off from global capital flows, but due to the vast size of China’s economy, foreign investors watch them closely and react to volatility. The country will announce inflation statistics for December at the weekend.
Wall Street was poised for a solid open, with Dow futures and the broader S&P 500 futures up 1.3 percent. The Shenzhen Composite Index, which tracks stocks on China’s second exchange, had tumbled 8.35 per cent, or 178.08 points, to 1,955.88.
In mid-afternoon trading, the S&P/TSX composite index was down for a seventh consecutive day, off 258.65 points – or more than two per cent – at 12,468.15 as commodity prices, including oil, continued to fall amid perceived weakness in the Chinese economy. The benchmark USA rebounded moderately in Asian daytime hours, rising 67 cents to $33.94 in electronic trading on the New York Mercantile Exchange. US West Texas Intermediate (WTI) was up 40 cents at $33.63 a barrel. Hong Kong’s Hang Seng advanced 1 percent to 20,547.46 and Seoul’s Kospi was up 0.6 percent at 1,914.87.
Similar speculation has been heard before, and investors have repeatedly called for Xiao’s head in recent months over the government’s interventions following the market falls.
The turmoil in China triggered a sell-off in Asian and Western stocks.
The CSI300 index fell 7.2 per cent to 3,284.74 points, while the Shanghai Composite Index lost 7.3 per cent to 3,115.89 points. It has been trading at 11-year lows.
US and European companies have rushed to sell cars and a multitude of other products to China’s fast-growing middle class. China accounted for more than half of Apple’s revenue growth in the fiscal year that ended in September.
The 10-year US Treasuries yield fell to a 2 1/2-month low of 2.119% yesterday and last stood at 2.156%. J.J. Kinahan, chief markets strategist for TD Ameritrade, said that’s making bonds attractive. “They may want to keep the yuan stable for a while to help calm the stock market”.
That was 0.5 percent weaker than the day before and the biggest daily drop since last August, when an abrupt near 2 percent devaluation of the currency also roiled markets.
Nomura’s China analyst Wendy Liu said in a January 5 note that circuit breakers had worked well in many countries, including the United States, Korea and Japan, but agreed China’s trigger thresholds were too close together, adding to investors’ fears. Silver rose 36.8 cents, or 2.6 percent, to $14.344 an ounce. The company said it will report smaller profits per vehicle in the fourth quarter. Samsung SDS gained 0.41 percent.
Chipotle Mexican Grill said it received a federal grand jury subpoena as the government looks into norovirus outbreak at a California restaurant this summer. The stock lost $22.36, or 5 percent, to $426.67.
The euro rose to $1.0825 from $1.0778.
In currency markets, the dollar fell to 117.95 yen from 118.67 yen in the previous day’s trading as investors bought the yen as a safe haven.
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In other energy trading, wholesale gasoline fell 1.8 cents to $1.128 a gallon, heating oil fell 1.4 cents to $1.052 a gallon and natural gas rose 9 cents to $2.472 per 1,000 feet. Copper was unchanged at $2.022 a pound.
