The broader S&P 500 index was initially flat at 1,943.09, while the Nasdaq gained 42.23 to 4,347.96. The Standard & Poor’s 500 index has fallen 5.2 percent this week and the Nasdaq is in a six-day skid.
Advertisement
The weakening of the yuan has also weighed on the market.
For the second time in four days, China suspended equities trading after stocks plunged on Thursday. Thursday’s selling was linked to weakness in the yuan, as the government’s decision to let the currency get weaker may be a bad sign of weakness in China’s economy.
Peter Boockvar, chief market analyst at The Lindsey Group, said removing the circuit breakers could take some short-term pressure off Chinese stocks – but won’t be a cure-all. “Many would argue it’s the beginning of a bear market”, Tim Anderson, managing director of MND Partners, wrote in a client note.
It will also have a bearing on the global oil prices as the imports of petroleum products by China will become expensive, thereby denting demand. A rebound in Chinese stocks helped shore up the mood in global stock markets Friday in the run-up to U.S.jobs data. The Dow lost 392 points the day before following a steep drop in China’s market. Foreign investors have little direct involvement in Chinese financial markets, but the size of China’s economy means the wild gyrations are a source of concern internationally.
China’s tumbling stock prices are, in themselves, nothing for investors outside the country to panic over.
The New Zealand dollar regained ground after China fixed the yuan reference rate marginally higher after eight straight days of cuts, easing concerns that the People’s Bank of China sees a weaker economy than many in the markets.
The CSI300 index rose 2.8 percent, to 3,384.99 points at the end of the morning session, while the Shanghai Composite Index gained 2.4 percent, to 3,199.56 points.
The Shanghai benchmark has dropped 12 percent so far this year, which is barely a week old.
It is based on the CSI 300 index, which tracks the largest 300 stocks on the two exchanges.
While investors should focus on China’s economy, not its turbulent equity market, the economy isn’t looking great either.
After the market closed Thursday, Chinese regulators removed the recently installed circuit breakers, hoping that will allow markets to find their level.
On Thursday, the Toronto Stock Exchange’s S&P/TSX Composite index lost 278.59 points, or 2.2 per cent, to close at 12,448.21. 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.
EUROPE: Stocks in Europe were mixed.
It’s not helping that crude oil prices continue to tumble. The contract on Thursday dropped $2. It sank 70 cents, or 2.1 percent, to $33.27 a barrel. The dollar fell to 117.92 yen from 118.38 yen late Thursday. The carnage in China seeped through to other Asian bourses.
Advertisement
The price of gold and silver both rose more than 1 percent, with gold at $1,105.60 an ounce and silver at $14.20 an ounce.
