Trading in China was automatically suspended as a result. Financial stocks also slumped.
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The Dow Jones (DJIA, Dow Jones Industrial Average) dropped by more than 5% (911 points) over four days. The S&P 500 index showed 1 new 52-week high and 39 new lows, while the Nasdaq recorded 7 new highs and 145 new lows. The S&P 500 fell 2.4%, while the Nasdaq tumbled 3%.
The price of crude oil fell to its lowest closing level in almost twelve years amid ongoing concerns about a global supply glut. The Nasdaq composite rose 19 points, or 0.4 percent, to 4,708. It was also the bleakest start to a year for the Nasdaq since 2000.
While all 10 industrial sectors of the S&P 500 traded lower, some retail stocks performed well. The gauge was also down 5.4 percent this week. European stocks and a key dollar index advanced (http://www.marketwatch.com/story/yen-slips-against-dollar-as-china-markets-find-stability-2016-01-08), while gold futures dropped, though the safety play stayed on track for a weekly gain of about 3.5%. “China’s stock market reform will remain a messy affair”. The FTSE 100 index of leading British shares declined 0.3 percent while Germany’s DAX lost 0.8 percent.
Analysts warn that anyone with money connected to this market needs to be very careful, and that a series of aftershocks from last year’s boom and bust could shake markets for months to come. Earlier this week, economic data caused investors to worry about China’s manufacturing and service industries.
The downturn in the USA has been concentrated in technology stocks, which could suffer if demand for iPhones and other electronics weakens.
China allowed the biggest fall in the yuan in five months, and Shanghai stocks were halted for the second time this week after another brutal selloff tripped a newly-imposed circuit breaker.
“When you have a market that begins a year with weakness, people are sort of suspect anyway”. In the last few days that has drowned out signs that the United States and Europe are doing fairly well.
“China’s been such a big driver of global growth for 15 years and now they’re not, and they don’t seem to have a plan for the next 15 years”, said John Canally, chief economic strategist at LPL Financial.
China says its economy is growing at close to 7 percent, but many investors don’t trust the government’s numbers and believe that figure is inflated.
“The sharp drop has led to speculation that China is letting go of the reins on the CNY (yuan), or perhaps targeting faster depreciation to reach an “equilibrium” level”, wrote analysts at Barclays, while conceding that no one was really sure. Crude finished the day at $33.16 a barrel, its weakest settle since February 2004. Meanwhile, an ounce of gold is trading at USD1,096.60, down USD11.20 from the previous session’s close of USD1,107.80. The CAC-40 in France was 0.6 percent higher at 4,428. The unemployment rate was unchanged at 5 percent.
Chinese stocks started the year with an epic 12% nosedive.
Korean traders gave a sigh of relief after the KOSPI rose 13.29 points to 1,917.62, despite pessimistic expectations throughout morning trading.
Some retail stocks performed well. Gap rose $1.17, or 4.6 percent, to $26.46. Apple sank 4 percent and has now fallen 27 percent since July.
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The dollar was up against all the major currencies, rising 0.22% against the pound, 0.66% against the euro and 0.57% against the yen.
