In overseas trading, stock markets across the Asia-Pacific region saw substantial weakness during trading on Monday.
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Anglo American was down 8 per cent, Glencore fell 7 per cent, while Antofagasta slipped 5 per cecnt. Energy briefly attempted gains.
U.S. markets are also poised for a tumultuous day of trading with Dow futures down 263 points, S&P futures down 29 points, and Nasdaq futures down 74 points. “I think traders will be focused on the pace of global growth, as it will doubtlessly affect the policy decisions of major central banks and the commodity sector”, said Bernard Aw, a market strategist at IG in Singapore. “It’s not unusual to have an outsized reaction when you’ve got a base case that 2016 could be a tough year”. “It’s very hard to step in the way of (that)”, he said. Once trading resumed, shares continued to slide throughout the afternoon, prompting the system to shut down trading early for the day as the average decline across all exchanges came to 7 percent from their 2015 closing prices. Britain’s FTSE 100 fell 2.4 percent while France’s CAC 40 dropped 2.5 percent.
The Middle East tensions is already causing turbulence in the oil markets.
Adding to these worries on Monday are geopolitical tensions in the Middle East. Saudi Arabia said Sunday it is severing diplomatic relations with Iran, a development that could potentially threaten oil supply. The violence follows Saudi Arabia’s execution of a prominent Shiite cleric.
His comments were echoed by Sanjiv Shah, chief investment officer at Sun Global Investments, who said: ‘The Chinese markets have fallen after data showed manufacturing weakened for the fifth month in a row.
At the start of July, major shareholders in Chinese companies were banned from selling their stakes for six months – but this policy is about to expire.
China’s Shanghai index has plunged almost 7 percent. Circuit breakers act as a kind of emergency brake to halt trading during times of extreme volatility.
The Shanghai Composite Index lost 6.85 per cent, or 242.52 points, to 3,296.66 points. It was the lowest level since September 2011. The 2-year yield held near 1.02 percent and the 10-year yield was around 2.22 percent as of 9:20 a.m., ET.
USA stocks hit session lows following fresh evidence of trouble in the American manufacturing sector.
The losses in Europe and the United States mirrored the move in MSCI’s broadest index of Asia-Pacific shares outside Japan, which posted its biggest loss since August 24 previous year.
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It was also the worst start to a trading year for the index, an ominous sign for what may arrive in the year ahead. Oil-services companies Weatherford International and Halliburton were up 3.5 percent and 0.7 percent. The iPhone maker’s stock turned in its first negative year since 2008. The DAX index in Germany, whose export-led economy is sensitive to China’s fortunes, tumbled 4.2 percent to 10,288.22. The ISM manufacturing index fell to 48.2 in December, the lowest reading since June 2009 when the Great Recession ended.
