The Shanghai Composite Index in mainland China rebounded 2.3 percent as the Chinese government said it will keep some market-stabilizing measures in place.
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Craigs Investment Partners broker Chris Timms expressed concerns yesterday the Chinese market could go into freefall but fears were allayed as the market rose 2% in early trading.
Chinese investors monitor stock prices in a brokerage house in Beijing, Friday, Jan. 8, 2016.
In the second such instance within a week, trading on the Shanghai and Shenzhen bourses was halted after shares plunged over 7 per cent within the first 30 minutes of trading, triggering the circuit breaker mechanism.
A Chinese investor monitors stock prices in a brokerage house in Beijing, Friday, Jan. 8, 2016.
Chinese stock investors play cards in a brokerage house in Beijing, Friday, Jan. 8, 2016.
Chinese stock prices dropped by 7 percent in just 29 minutes Thursday, sending shockwaves through the global economy.
“U.S. markets are getting wrapped in with global markets, and rightfully so, but so far there isn’t massive panic selling here”, said Jonathan Corpina, a managing partner at Meridian Equity Partners.
Stocks all over the world were hit after the news of the China stock market.
Markets will remain wary of China’s currency goals, as mixed messages come from the central bank, which has repeatedly said it sees no basis for the currency to depreciate, while steering it gradually lower.
The Dow Jones Industrial Average declined 252 points, or 1.5%, to 16907, its lowest close since 6 October.
The benchmark Korea Composite Stock Price Index (KOSPI) added 13.29 points to end at 1,917.62. The Nasdaq Composite fell 56 points, or 1.1%, to 4836.
The rough start to 2016 is being blamed on several factors.
In other commodity news, March copper shed seven cents to US$2.02 a pound and the February contract for natural gas rose 11.5 cents to US$2.382 per mmBtu. The stock dropped $2.70, or 10.1 percent, to $24.04.
Goldman Sachs wrote this week that the potential for further capital outflows is large, especially if the devaluation of the yuan continues apace. Those fears have drowned out signs that the United States and Europe are doing fairly well. The slowdown in the Chinese economy is also a negative; China is expected to post its weakest annual expansion in a quarter century when fourth quarter growth data is released later this month.
Investors are also alarmed by the steep decline in China’s currency.
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“China’s been such a big driver of global growth for 15 years and now they’re not, and they don’t seem to have a plan for the next 15 years”, Canally said. Gap had risen 5.7 percent Thursday. On Thursday, it lost 48 cents to $33.75. The benchmark 10-year note yield US10YT=RR sank 7 basis points overnight to its lowest since mid-December. The dollar fell to a 4-1/2-month low of 117.66 yen. The euro was up 0.4 per cent at $1.0824 with the dollar on the back foot.
