“(Equity) investors are not going to like the start of this year, particularly when you have news that trading was halted in China due to a market sell-off”, said Naeem Aslam, chief market analyst at AvaTrade.
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He was referring to the gradual unwinding of other measures used by the Chinese authorities since August, including bans on short-selling and new share issues.
Escalating tensions in the Middle East, sparked by Saudi Arabia’s execution of a prominent Shia cleric over the weekend led to a jump in oil prices, adding to today’s uncertainty. The pan-European FTSEurofirst 300 index fell 2.3%, while the eurozone’s blue-chip Euro Stoxx 50 index lost 2.6%.
The Toronto Stock Exchange’s S&P/TSX composite index was down 234.06 points or 1.80 per cent after almost two hours of trading, taking the index to 12,775.89 at late morning. The turmoil in China’s market helped pull other global stock markets lower on Monday. “This isn’t a blip”. And the stock of Imax China ended the day down 1.9 percent.
In Europe, Britain’s FTSE 100 fell by 2 percent, Germany’s DAX index was 3.3 percent lower and France’s CAC 40 dropped 2.1 percent.
Huang Cengdong, an analyst for Sinolink Securities in Shanghai, said selling accelerated as investors tried to lock in trades before activity was halted.
“You have a market that’s still highly warped by government intervention, by government shareholding, by general fear and uncertainty -and then you have a lot of stuff that’s just grossly overpriced”, he said. And Hong Kong’s Hang Seng index fell 2.7%. European stocks also slumped.
The Caixin/Markit purchasing managers’ index slipped to 48.2 in December, marking the 10th consecutive month of shrinking factory activity in the sector. “Asian exporters are expected to continue struggling with exports contraction and growth prospects dampened by related manufacturing gloom”.
The rise came as relations between leading crude producers Saudi Arabia and Iran deteriorated, raising concern about potential supply disruptions.
Saudi Arabia cut diplomatic ties with Iran after its embassy in Tehran was attacked.
Benchmark U.S. crude added 14 cents to $37.19 per barrel in electronic trading on the New York Mercantile Exchange.
“If the stocks fall by the 10% daily limit, I may want to sell to prevent further losses, but the circuit breaker could prevent me from doing that until the following trading day”. Gold is often seen as a safe haven in times of political or economic uncertainty.
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USA stock futures were sliding on Monday following a market rout in Asia, where a plunge in Chinese stocks triggered a trading halt. Netflix and Amazon, both of which more than doubled in price in 2015, were down sharply. Amazon gave up $42.64, or 6 percent, to $633.05 and Netflix sank $5.44, or 5 percent, to $108.90.
