In the US, the Dow Jones Industrial average fell more than 2 percent shortly after the opening bell. Dow futures were down 1.7 percent, while S&P 500 futures shed 1.8 percent.
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SHANGHAI, Jan 4 China’s major stock exchanges tanked on the first trading day of the year, triggering a “circuit-breaker” that suspended equities trade nation-wide for the first time and put months of regulatory work to restore market stability at risk.
The CSI 300 briefly plummeted 7.02 percent; when that index rises or falls 7 percent, a trading halt in China’s markets is triggered for the rest of the session.
Investors returning to the market after the New Year holiday are facing a selloff that spread from China to Europe, and a reminder of the concerns that dragged down stocks in August, sending the Standard & Poor’s 500 Index to its first correction in four years.
Investors moved into haven investments, with gold up 0.9% at $1070.10 a troy ounce and the yield on 10-year U.S. Treasurys down around 0.04 percentage point to 2.233% as prices rose.
Hong Kong’s Hang Seng index was also down 2.48 percent at 21,370.62. On Friday, an official manufacturing index also showed a persistent contraction in factory activity despite Beijing’s stimulus measures.
The market is also anxious about the forthcoming annulment of a rule which restricts shareholders with holdings of more than five percent in a company in selling shares.
Escalating tensions in the Middle East briefly sent the price of oil higher.
Meanwhile, Zhu Bin, an analyst at Southwest Securities in Shanghai told the Financial Times that “with the overall economy not showing much sign of recovery, the market just rotated through various popular themes at the end of a year ago, but those are now played out”. “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.
USA stock futures dipped 0.4 percent ESc1 .
Anglo American was down 7%, Glencore fell nearly 6%, while Antofagasta slipped 5%.
Saudi Arabia severed diplomatic ties with Iran after Iranian protesters stormed Saudi Arabia’s embassy in Tehran Sunday following Saudi Arabia’s execution of Shiite cleric Nimr al-Nimr on Saturday.
The new mechanism adds to trading restrictions that include a 10 percent limit on daily swings for individual stocks and a so-called T+1 rule preventing investors from buying and selling the same shares in a single day.
“The circuit breaker mechanism is an artificial interruption of the market correction, and it may actually strengthen the impact of the correction”.
The sharp gain in oil prices lifted up the energy stocks on Asian trading screens but Iran and Saudi Arabia’s geopolitical tension wiped any gains garnered.
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CURRENCIES: The dollar weakened to 120.05 yen from 120.26 yen.
