The offshore yuan was last at 6.6727 to one USA dollar, strengthening from a five-year low of 6.7511 Thursday. The Nasdaq composite index fell 82 points or 1.7 percent, to 4,753.
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Oil and gas companies again fell more than the rest of the market as energy prices continued to plunge. Natural gas rose 11.5 cents, or 5.1 percent, to $2.382 per 1,000 cubic feet.
The mechanism, which had been in place since the start of this year, suspends trading on China’s main stock markets if stocks fall 7 percent.
The benchmark Shanghai Composite Index and the Shenzhen Composite Index, which tracks stocks on China’s second exchange, both opened more than two percent higher.
Panic selling in Asia prompted by developments in China spread across the globe and threw the Toronto stock market into a tailspin Thursday, capping off seven consecutive days of losses and thrusting the index into bear market territory. Officials removed the market circuit breaker late yesterday after some investors blamed the mechanism for exacerbating losses. The government’s attempts to appease the nation’s army of retail investors comes just a month ahead of the Chinese New year celebrations, a time when hundreds of millions of people travel for traditional family gatherings.
“The volatility in the FX market amplifies those macro concerns and that’s clearly not a positive for the stock market”.
Analysts said Beijing’s introduction of the “circuit breaker” this week had proved counter-productive, with investor fears of being unable to sell unwanted stocks outweighing any reassurance over market stability. On Monday, trading in China was suspended after data showed China’s manufacturing contracted for a fifth straight month.
The tempest in China’s markets has been felt around the world.
“Additional volatility in China’s stock market remains nearly certain in the first half of 2016”, said economist Brian Jackson of IHS Global Insight in a report.
China’s stock market sank about 7 percent Thursday after the yuan fell to its lowest level against the dollar since March 2011.
In Europe, where most markets will soon close, Britain’s FTSE 100 fell by 1.8 percent, Germany’s DAX index was 2.5 percent lower and France’s CAC 40 dropped 2.1 percent.
Jeweler Signet reported strong holiday-season sales, and its stock gained $7.02, or 5.5 percent, to $134.33. The Dow average is down 9.8 percent from its peak in May, and the S&P 500 index has lost 8.8 percent since then.
The Shanghai benchmark has dropped 12 per cent so far this year, which is barely a week old.
Analysts said the move injected life into the market.
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The circuit breakers trip when there are big swings in the CSI 300 index. Policy makers went to extreme lengths to support shares in the midst of a $US5 trillion rout last summer, including ordering stock purchases by state funds, suspending initial public offerings and allowing trading halts that froze hundreds of mainland-listed shares. “They’ll probably try and do something to stablise the currency”, he said.
