Most investing professionals recently surveyed by CNNMoney listed China as the biggest risk to USA stocks.
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Shares of oil majors Exxon and Chevron fell and the energy index dropped 3.6 percent as oil prices plunged below $35 a barrel. Frankfurt managed a gain despite Volkswagen slumping 4% after United States authorities turned up the heat on the German carmaker over pollution cheating by filing a lawsuit that could cost the company well over 20bn. Then, on Thursday, China stocks traded only 15 minutes before plunging an additional seven percent and setting off the circuit breaker again to halt trading.
The Shanghai Composite Index fell 7.3% when trading halted, bringing its losses over just four trading days to 12%.
At 9.42 a.m., trading was suspended for 15 minutes after the Hushen 300 dropped by over five percent.
Chinese economy is still facing pressure as demand in overseas markets has declined.
A lower currency should make Chinese exports cheaper on world markets – a challenge for overseas competitors – but at the cost of its imports becoming more expensive in yuan terms.
Ripple effects from the Chinese plunge were felt around the world.
The China Enterprises Index tumbled 4.2 percent to 8,753 points, a closing level not seen since October 2011.
In Europe, Germany’s DAX advanced 0.7 percent to 10,050.46 and Britain’s FTSE 100 gained 0.8 percent to 5,998.47. Futures augured sharp losses on Wall Street. The S&P 500 and the Nasdaq also finished lower.
Market participants said the move, which was reported by Bloomberg, was positive as it removed the element of fear from trading.
The circuit breakers trip when there are big swings in the CSI 300 index.
Prices plunged 30 percent after that, triggering a panicked response by Beijing.
“Sentiment seems to be rather fragile at the moment as the soft macroeconomic environment together with the fear of not being able to sell during a market correction causing some anxiety among investors”, he wrote in a note to clients.
Other Asian markets also declined, as Tokyo’s Nikkei Average lost 1.7 per cent, Sydney’s S&P/ASX200 skidded 2.1 per cent, and Seoul’s Kospi Composite Index moved down 0.9 per cent.
The New Zealand dollar slipped to 61.62 euro cents from 61.90 cents, fell to 78.62 yen from 78.92 yen, weakened to 4.3456 yuan from 4.3545 yuan and was little changed at 45.34 British pence from 45.37 pence. On Wednesday it closed at its lowest price since December 2008.
Aerospace giant Boeing fell $5.82, or 4.2 percent, to $133.01, and freight railroad Union Pacific felt $1.75, or 2.3 percent, to $73.08.
The dollar index, which measures the greenback against a group of six currencies, .DXY was down 0.2 percent in late trading at 99.160, a shade below the one-month peak set on Tuesday.
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The nuclear test has increased concerns over the geopolitical climate, which prompted traders in the region to dump the regional currencies but raise their holdings in the US dollar as a safe haven, they added. Some other Asian currencies retreated in concert with the yuan. The February bullion contract on commodity markets rose $16.50 to US$1,108.40 an ounce.
