It was the shortest trading time in the history of China’s stock market. At that point, the market ends the day.
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The “circuit breaker” functions by automatically suspending trading for 15 minutes if shares fell by five percent in one day, and closing them for an entire day if they dropped seven percent or more.
China stocks swung wildly early Friday before staying in positive territory and ending the day up 2 percent, after regulators suspended a newly-minted circuit breaker mechanism in a bid to calm panicky investors.
The markets suffered a second straight day of losses as investors continue to fret over the stability of China’s market and the price of oil. S&P 500 futures fell 47 points, or 2.32% to 1940, while Nasdaq 100 futures declined 121 points, or 2.74% to 4323. The Shenzhen Composite Index for China’s smaller second exchange slumped 8.3 percent to 1,955.88. The halts, which went into effect at the beginning of the year, were triggered twice this week. The price of US crude oil plunged to its lowest level since 2004 as traders anxious that weakness in China would translate into lower global demand for energy.
Uncertainty about how quickly China’s economy is weakening continued to hammer USA stock markets on Thursday, sending the Dow Jones industrial average down 392 points – or 2.3 percent of its total value – for its biggest loss in three months.
Market participants said the move was good news as it removed the element of fear from trading.
The country’s stocks are falling so fast that they’re panicking investors and tripping automatic levers called “circuit breakers” that shut down the entire market when it’s crashing.
The Shanghai Composite Index slid 0.2 per cent at 9.55am local time after gaining as much as 2.2 per cent.
If the index falls by 5 percent, the markets are suspended for 15 minutes.
European markets also dropped.
But as the Chinese share rout came to a halt, global attention was also turning to the health of the United States economy as figures showed weakness in manufacturing, construction spending, vehicle sales and export growth – prompting experts to slash fourth quarter growth forecasts.
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The People’s Bank of China (PBOC) again surprised markets earlier today by setting the official midpoint rate on the yuan at 6.5646 per dollar, the lowest since March 2011.
