Concern over Chinese economy sends stocks reeling
Shares on major exchanges fell for a sixth consecutive day on Thursday while crude prices bounced back from multi-year lows as volatile markets digested another move lower in the yuan and Chinese efforts to stabilize a sinking stock market.
Stocks on Wall Street pared losses after China suspended the circuit breaker that stops trading for the day when stocks fall seven per cent, a halt that occurred twice this week. Analysts and investors said the mechanism, put in place to avoid market volatility, may have backfired.
Brent crude cut a loss of more than six per cent to trade down 0.4 per cent, with traders citing short-covering. US crude , down as much as 5.5 per cent earlier, was down 0.8 per cent.
The seven per cent drop in Chinese markets overnight had triggered a flight to safety, but the circuit breaker reversal helped cut losses in other risk assets, including the dollar. Investors, however, remain concerned that China is struggling to keep control of the yuan. The People's Bank of China (PBOC) set the yuan midpoint rate at 6.5646 per dollar, a 0.5 per cent decline that was the biggest between daily fixings since August. It was the eighth consecutive day the PBOC had set a lower guidance rate.
Jittery stocks
On Wall Street, energy stocks pared a two-per cent loss and major indexes were down about one per cent, about half as much as at their session lows. Still, the S&P 500 was down almost four per cent so far this week.
"There is a wall of worry under full construction, brought on by China, fall in oil prices and uncertainty regarding quarterly earnings," said Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis.
The Dow Jones industrial average fell 211.2 points, or 1.25 per cent, to 16,695.31, the S&P 500 lost 25.97 points, or 1.3 per cent, to 1,964.29 and the Nasdaq Composite dropped 79.34 points, or 1.64 per cent, to 4,756.42.
The pan-European FTSEurofirst 300 index and the euro zone's blue-chip Euro STOXX 50 index were down 2.4 per cent and 1.8 per cent respectively, having fallen more than three per cent earlier in the session. A gauge of major stock markets globally fell 1.4 per cent.
Strong euro
Investors fear China's economy is even weaker than had been imagined, with Beijing, in a bid to help exporters, allowing the yuan's depreciation to accelerate.
The dollar trimmed losses against a basket of currencies after the Chinese stock exchanges announced the removal of the circuit breaker. The dollar index was however down 0.4 per cent on the day.
The euro gained 0.7 per cent to $1.0849. The yen rose 0.4 per cent to 118 per dollar after hitting 117.30, its strongest since late August.
The benchmark US Treasury yield edged up after touching its lowest since late October. US 10-year Treasury notes were last down 4/32 in price to yield 2.1914 per cent from 2.177 per cent late Wednesday.
Global oil benchmark Brent gained 0.5 per cent at $34.40 a barrel and WTI gained less than 0.1 per cent to $33.99 a barrel.
Stocks on Wall Street pared losses after China suspended the circuit breaker that stops trading for the day when stocks fall seven per cent, a halt that occurred twice this week. Analysts and investors said the mechanism, put in place to avoid market volatility, may have backfired.
Brent crude cut a loss of more than six per cent to trade down 0.4 per cent, with traders citing short-covering. US crude , down as much as 5.5 per cent earlier, was down 0.8 per cent.
The seven per cent drop in Chinese markets overnight had triggered a flight to safety, but the circuit breaker reversal helped cut losses in other risk assets, including the dollar. Investors, however, remain concerned that China is struggling to keep control of the yuan. The People's Bank of China (PBOC) set the yuan midpoint rate at 6.5646 per dollar, a 0.5 per cent decline that was the biggest between daily fixings since August. It was the eighth consecutive day the PBOC had set a lower guidance rate.
Jittery stocks
On Wall Street, energy stocks pared a two-per cent loss and major indexes were down about one per cent, about half as much as at their session lows. Still, the S&P 500 was down almost four per cent so far this week.
"There is a wall of worry under full construction, brought on by China, fall in oil prices and uncertainty regarding quarterly earnings," said Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis.
The Dow Jones industrial average fell 211.2 points, or 1.25 per cent, to 16,695.31, the S&P 500 lost 25.97 points, or 1.3 per cent, to 1,964.29 and the Nasdaq Composite dropped 79.34 points, or 1.64 per cent, to 4,756.42.
The pan-European FTSEurofirst 300 index and the euro zone's blue-chip Euro STOXX 50 index were down 2.4 per cent and 1.8 per cent respectively, having fallen more than three per cent earlier in the session. A gauge of major stock markets globally fell 1.4 per cent.
Strong euro
Investors fear China's economy is even weaker than had been imagined, with Beijing, in a bid to help exporters, allowing the yuan's depreciation to accelerate.
The dollar trimmed losses against a basket of currencies after the Chinese stock exchanges announced the removal of the circuit breaker. The dollar index was however down 0.4 per cent on the day.
The euro gained 0.7 per cent to $1.0849. The yen rose 0.4 per cent to 118 per dollar after hitting 117.30, its strongest since late August.
The benchmark US Treasury yield edged up after touching its lowest since late October. US 10-year Treasury notes were last down 4/32 in price to yield 2.1914 per cent from 2.177 per cent late Wednesday.
Global oil benchmark Brent gained 0.5 per cent at $34.40 a barrel and WTI gained less than 0.1 per cent to $33.99 a barrel.
Don't miss the most important news and views of the day. Get them on our Telegram channel
First Published: Jan 07 2016 | 11:41 PM IST