China’s recent implementation of a circuit breaker rule is said to be the culprit of the stock market crash. Investors were also weighing the latest market drop in China.
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The Dow Jones industrial average was up about 100 points, or 0.6%, in early trading. Contracts on Brent crude dropped 1.5 percent to $31.09 in London.
The Shanghai index opened the new year on January 4 with a 7 percent plunge before trading was closed early for the day. China’s stock market has little connection to the rest of its economy, but its decline focused foreign attention on the slowdown in Chinese growth.
However, Hughes cautioned that oil prices could prove a drag and that any test of the $30 a barrel level could leave oil, mining and any other commodity stock exposed to downside risk. Freeport-McMoRan sank 99 cents, or 18 percent, to $4.41, making it the biggest decliner in the S&P 500 index.
DuPont was the blue-chip index’s biggest laggard, down 3.3 percent, followed by Caterpillar’s 2.9 percent loss. Chesapeake Energy fell 29 cents, or 7.1 percent, to $3.88. “This has flowed around the globe, kneecapping equities, where valuations were already deemed to be stretched”, said Mark Smith, a senior economist in Auckland at ANZ Bank New Zealand. The stock lost $1.57 to $27.81.
WORRISOME UPDATE: Prescription drug distributor McKesson slid 10.8 percent after the company said weakening prices for generic drugs are hurting its business.
The northbound quota for the Hong Kong-Shanghai Stock Connect, now set at 13 billion yuan, saw net inflows of 0.19 billion yuan.
Analysts say they expect the rocky start to the year for Chinese shares to continue, though.
HCA Holdings also rose after the hospital operator raised its profit forecast.
Perhaps, but a move by China on Monday to buy yuan in the offshore market and hamper those trying to bet on a weaker currency led to a spike in Hong Kong interbank lending rates in yuan, in turn possibly adding to the selling pressure in stocks. The slide battered shares of energy companies, with S&P 500 energy stocks down 1.8%. The benchmark Shenzhen index ended the day down 6.6 percent.
WALL STREET: U.S. stocks had their worst week in four years following a sell-off sparked by concern China’s economy might be slowing.
Keeping score: In Europe, Germany’s DAX was up 0.6 percent at 9,908 while the CAC-40 in France rose 0.4 percent 4,352.
The euro traded at $1.0805, having slipped 0.6 percent on Monday.
The Shanghai Composite index fell over 5% in Monday’s trading, reversing a small rebound the previous week, as investors’ worries over China see no signs of waning.
In Australia, the ASX/S&P 200 index slumped more than 2% to 4,880 points, its lowest point for two years.
“But most people would recognise that were you to take away the interventions it is a currency that would fall”. The yield on the 10-year Treasury note fell to 2.09 percent from 2.17 percent late Monday.
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The dollar fell half a yen to a near five-five month low of ¥116.70 in early trade, before steadying around ¥117.13.
