The benchmark S&P 500 USA stock index has notched its worst five-day start to a year on record as fear of a slowdown in China offset a surprisingly strong payrolls report in the United States. This comes after the stock market just wrapped up its weakest year since the 2008 financial crisis.
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The People’s Bank of China made its largest downward adjustment to the yuan since August, sending China’s stock market more than 7% lower in its shortest-ever trading day.
Trading in Chinese stocks was suspended Thursday for a second day this week after a dramatic plunge that sent shocks through global markets.
The Dow has lost 5.2 percent since the end of 2015 in the worst first four trading days since the 30-stock index was created in 1928.
Intensifying concerns about China’s slowing economy and another steep plunge in its stock market cast a pall over global equities and oil prices Thursday, as investors around the world fled risky assets.
Earlier, circuit-breakers triggered a suspension in Chinese trading following a 7% fall in the country’s main index.
Oil prices CLc1 LCOc1 fell to 12-year lows and copper prices CMCU3 touched their lowest since 2009, weighing on energy and materials shares.
The Dow sank 392.41 points, or 2.3 percent, to 16,514.10. Aerospace company Boeing lost $3.33, or 2.4 percent, to $135.50 and railroad operator Union Pacific shed 89 cents, or 1.2 percent, to $73.94.
Declining issues outnumbered advancing ones on the NYSE by 2,676 to 410, for a 6.53-to-1 ratio on the downside; on the Nasdaq, 2,431 issues fell and 418 advanced for a 5.82-to-1 ratio favouring decliners.
Richmond Federal Reserve President Jeffrey Lacker struck a hawkish note on Thursday, saying the central bank may need to raise interest rates more than four times this year if oil prices stabilize, the dollar stops appreciating and inflation surges toward the Fed’s 2 percent target.
Economists polled by MarketWatch expect the US added 215,000 jobs last month as unemployment stayed at 5.0%. The Shanghai composite is down -11.7% and the tech heavy Shenzhen composite out of China is down -15.19%.
A gauge of major stock markets globally fell 1.4 percent.
The euro was down 0.1 percent against the dollar at $1.0923 EUR=, while the greenback lost 0.1 percent to 117.52 yen JPY=. Gold, on the other hand, was up as much as 0.8% to reach a two-month high, trading at $1,102.85 an ounce.
The latest selloff has Wall Street once again flirting with “correction” mode, which signals a 10% decline from recent highs.
Crude oil futures tested $32.00 per barrel.
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BG Group was among the index’s top risers with a 26.9p gain to 963.8p, while Anglo American was 5.9p better off at 246.55p. “The drop in the S&P futures would be quite a lot for the US market in one day”.
