Stocks Fall Sharply on China Slowdown Worries
04 Janeiro 2016 - 8:00AM
Dow Jones News
Global stocks sold off sharply on the first trading day of 2016
following fresh signs of an economic slowdown in China.
Weaker-than-expected manufacturing data and a falling currency
triggered declines in mainland Chinese stocks so steep that
authorities halted trading there for the rest of the day.
European stocks also fell sharply, with the Stoxx Europe 600
down 2.2% in early trade, led by a 3.3% drop in Germany's
exporter-heavy DAX index.
Meanwhile, futures markets pointed to a 1.4% opening loss for
the S&P 500. Changes in futures aren't necessarily reflected in
market moves after the opening bell.
"The rout in China is placing pressure on markets more
globally," said economics at Investec in a note.
Losses in European equities were led by the basic resources and
auto sectors, which are both sensitive to Chinese demand.
Miners were down 3.7%, led by a 7.2% fall in Anglo American PLC
and a 5.8% drop in Glencore PLC.
The moves came after data showed Monday that Chinese factory
activity fell in December, casting doubts on the efficacy of
Beijing's policy of monetary easing and ramped-up spending to boost
growth.
In the auto sector. Fiat Chrysler Automobiles NV was down 31.5%
after distributing its 80% stake in sports-car unit Ferrari to
shareholders.
The CSI 300, a benchmark of the largest 300 stocks listed in
Shanghai and Shenzhen, fell 7% just after 1.30pm local time,
triggering a new circuit-breaker system, which took effect on
Monday.
The Shanghai Compositie Index ended 6.9% lower.
A weaker local currency also put pressure on local stocks. The
offshore and onshore yuan both traded at their weakest levels since
2011 after China's central bank guided its currency weaker
Monday.
Losses in China weighed on other Asian markets. Japan's Nikkei
Stock Average lost 3.1% and Hong Kong's Hang Seng Index fell
2.7%.
"A fall in Chinese markets has brought about a jittery start to
the year," said the economists at Investec.
In commodities markets, Brent crude oil was last down 0.2% at
$37.14 a barrel. Rising tensions between Saudi Arabia and Iran had
sparked speculation about a possible disruption to supply, pushing
oil prices higher in Asian trade. Expectations for more crude
supply from Iran this year weighed on oil prices in 2015 when Brent
crude dropped 35%.
Gold was up 1.1% at $1072.10 an ounce following its third
consecutive annual loss in 2015.
In currencies, the euro was up 0.7% against the dollar at
$1.0929, while the dollar fell sharply against the yen, down 1.1%
at ¥ 119.0060.
Fresh data this week will offer investors more clues into the
health of the U.S. economy, including the Institute for Supply
Management's purchasing managers index later Monday.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
January 04, 2016 04:45 ET (09:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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