Shanghai stocks slid 7 per cent to trigger the halt in trading, a repeat performance of Monday’s sudden tumble.
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As a result of it all, Thursday was the shortest trading day in the 25-year history of China’s stock markets. Investors gather near a display board showing the plunge in the Shanghai Composite Index at a brokerage in Beijing, China, Thursday, Jan. 7, 2016.
But on Thursday the restrictions, also brought in during the summer, were extended indefinitely with some tweaks, including a requirement to disclose planned sales 15 trading days in advance.
In the US, where markets have been trounced this week, investors pored over the latest minutes from the Federal Reserve’s December policy meeting at which the benchmark interest rates were raised for the first time in almost a decade. Technology and financial companies were among the hardest hit. That set off another slump in Asian and European stocks. Sharp Corp. slumped 3.3 percent.
In Europe, Germany’s Dax dropped 4.5 percent, while France’s CAC 40 declined 2.5 percent and London’s FTSE 100 shed 2.4 percent. The dollar slipped 0.2 percent 98.97 against a basket of major currencies.
The Chinese government spent at least 1.5 trillion yuan ($236 billion) on the 2015 market bailout, according to analysis by Goldman Sachs.
Brent gained 2.2 percent to $34.49 after touching $32.16 on Thursday, the lowest since April 2004. Stocks had also fallen throughout Monday. Wall Street futures point to a near 1 percent bounce on the S&P 500 (ESc1) and Dow Jones Industrial (1YMc) after what been their worst-ever start to a year.
Those plans went wrong when markets soared faster than Beijing wanted. Australian shares dipped 0.1 percent.
The upheaval disrupted the ruling Communist Party’s plans to use the stock markets as a tool to make China’s state-dominated economy more competitive and productive. Economic reports caused investors to worry about China’s manufacturing and service industries. “What markets don’t like above all is that there is no telling what the Chinese central bank is trying to do on the yuan”, said Teppei Ino, currency analyst at Bank of Mitsubishi-Tokyo UFJ in Singapore.
The first week of the new year has certainly been an eventful one with Chinese markets once again displaying their instability and unpredictability. For now, the bottom line is that China looks troubled, and that leaves the rest of the world anxious.
The People’s Bank of China said Tuesday that it had injected 130 billion yuan ($19.9 billion) into the financial system. China’s officials may in fact want some trade-weighted depreciation in order to stimulate their slowing economy.
When Chinese stock markets tumbled in June 2014, sending shockwaves around the globe, the government introduced a flurry of measures to reassure traders.
The equities sell-off in Shanghai and slowdown in China may in the end have little impact on the overall course of the US economic recovery, Fed policymakers said on Thursday.
Zinc on the London Metal Exchange dropped 1.2 percent to $1,554 a metric ton. That put it on track for a decline this week of about 6 percent, which would be its biggest fall since August. Copper fell 0.3 percent.
In other energy trading, wholesale gasoline declined 1.6 cents to $1.146 a gallon and heating oil lost 1.5 cents to $1.066 a gallon.
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Bonds prices rose. The yield on 10-year Treasury bond fell to 2.15 percent from 2.17 percent.
