Chinese stocks nosedived on Thursday, triggering the second daylong trading halt of the week and sending other Asian markets sharply lower as investor jitters rippled across the region.
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The price of oil plunged to its lowest level since 2008 on the prospect that global demand could fall further.
The selling this time, though, was prompted in part by worries about a slowdown in China’s manufacturing and service sectors.
Markets were already lower in Asia and Europe by the time trading began in the US after North Korea claimed to have conducted a test of a hydrogen bomb. The surprise announcement makes it tougher to curb North Korea’s longstanding efforts to establish an arsenal of nuclear-armed long-distance missiles.
The Dow Jones industrial average skidded 187 points, or 1.1 percent, to 16,721 as of 10:25 a.m. Eastern.
The euro was down 0.1% against the dollar at $1.0729 after the eurozone composite purchasing managers index was revised up.
USA crude fell 21 cents, or 0.6 percent, to $33.79 a barrel in NY. Brent crude, a benchmark for worldwide oils, lost 72 cents to $35.69 a barrel in London. The FTSE 100 index of leading British shares declined 0.7 percent while Germany’s DAX lost 1.3 percent. Hong Kong’s Hang Seng rose 0.6 percent and South Korea’s Kospi added 0.7 percent.
This kind of volatility in China has been common in recent months, and because of government regulations, few foreigners even own stocks on the Chinese markets that seized up. The Standard & Poor’s 500 index has fallen 4.7 percent this week and the Nasdaq is in a six-day skid. THE QUOTE: Scott Wren, senior global equity strategist for the Wells Fargo Investment Institute, said the market was overreacting to the latest signs of weakness in China.
“The Nikkei will trade below its 2015 high for most of this year”, she said. “They’re trading on fear that Chinese growth is going to collapse and that these lower oil prices are going to lead to a growing number of defaults in the high-yield bond market”.
The price of copper fell 2 percent, however. “They want the security of knowing that their money is safe”.
Government measures introduced past year to prop up share prices are being gradually withdrawn while investors are also unnerved by possible signs the country’s economy is in worse condition than thought.
Brent crude oil prices hit new 11-year lows as the face-off between Saudi Arabia and Iran over Riyadh’s execution of a Shi’ite cleric was seen extinguishing any chance of major producers co-operating to cut production.
‘Clearly the “circuit breaker” is having the opposite effect to what is intended and is making things worse, ‘ said Mark Dampier, head of investment research at Hargreaves Lansdown. Urban Outfitters climbed 68 cents, or 3.1 percent, to $22.60.
GAP WOES: Retailer Gap said its sales slumped in December. The company said it will report smaller profits per vehicle in the fourth quarter. Nordstrom gave up $1.70, or 3.5 percent, to $46.80 and Kohl’s fell $2.71, or 5.3 percent, to $48.15. NETFLIX JUMPS: Netflix made the biggest gain on the S&P 500.
The streaming video service announced at an electronics show in Las Vegas that it would debut in 130 countries, with the notable exception of China. It slumped 6.9 percent on Monday and 0.3 percent on Tuesday.
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