Jitters over another bad day for Chinese stocks sent shares on USA markets down for the second day in a row Thursday, with all major indexes dropping by more than 2 percent.
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– Reuters pic, January 8, 2016.United States stocks extended recent sharp losses yesterday, putting the Dow on track for its worst start to a year in more than a century, as market volatility in China and a relentless slide in oil prices rattled investors. 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.
“The poor start to the year clearly warns that global growth concerns remain, that commodity prices are still under downwards pressure and that volatility in investment markets will likely remain high”, said strategist Shane Oliver of AMP Capital.
The S&P 500 lost 2.4% to 1,943 points and the NASDAQ fell 3% to 4,689 points. The S&P 500 and Nasdaq are down about 0.5% apiece.
The slowdown in China is worrisome around the globe because the country’s manufacturers are huge buyers of raw materials, machinery and energy from other countries.
Peter Boockvar, chief market analyst at The Lindsey Group, said the move could take some short-term pressure on Chinese stocks but won’t be a cure-all. Hotel group Dalata finished 1.3 per cent higher at €5.257 after experiencing sell offs in the previous couple of days.
That’s one reason European and Japanese stock indexes have fallen even more than US markets this week. As a result, China suspended a so-called circuit breaker, implemented only earlier this week to avoid panic selling.
EUROPE: Stocks in Europe were mixed. The superpower had to halt trading earlier Thursday when losses plummeted 7 percent. The S&P is on pace for a weekly fall of 4.9% as of Thursday’s close, while the Dow is down 5.2%.
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Investors in China continue to be tired of slower growth in the Chinese economy than initially forecast and, the depreciation in the value of the Chinese currency, the yuan.
This is the first jobs report since the Federal Reserve raised interest rates last month for the first time in almost a decade. “Given the extreme risk-off nature of our first four days of trading this year, bargain hunters may be enticed to step into the market”. The benchmark US rebounded moderately in Asian daytime hours, rising 67 cents to $33.94 in electronic trading on the New York Mercantile Exchange.
The CSI300 index and the Shanghai Composite index both closed up 2 per cent, capping off a week of tumult.
The benchmark US Treasury yield hit the lowest since late October, reversing an initial rise after the strong jobs data that also showed hourly earnings were unchanged versus expectations of a 0.2 per cent increase.
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CURRENCIES, BONDS: The euro fell to $1.089 from $1.0927 and the dollar edged up to 117.75 yen from 117.50 yen late Thursday.
