China halts stock trading as market lurches down again

The pan-European FTSEurofirst 300 index fell 2.5 percent and the euro zone’s blue-chip Euro STOXX 50 index declined by 2.9 percent.

Under the new mechanism, which was introduced on the first day of trading in 2016, swings of up to 5% trigger a 15-minute suspension in trading, while a rise or fall of 7% halts trading for the remainder of the day.

BEIJING (AP) – China’s stock market lurched lower again Monday, triggering “circuit breakers” that halted trading.

Traders respond more directly to government cues and the availability of credit.

The technology-heavy Shenzhen Composite was the worst performer and fell by more than 8 percent.

China’s leading tech companies, which have emerged as aggressive players in the entertainment space over the past few years, also slipped on the Hong Kong exchange.

The pan-European Stoxx 600 plummeted over 3 percent at the open and was last trading down 2.3 percent.

“Retail investors in the Chinese stock market are often driven by sentiment and tend to follow the crowd”.

For global markets, the new year is off to a bad start. Japan’s benchmark Nikkei 225 index closed 3.1 percent lower at 18,450.98 as a stronger yen weighed on shares of major exporters.

Overall, Shanghai fell by 6.86% by market close.

The cautious mood towards riskier assets helped the Japanese yen, with the dollar falling below 119 yen for the first time since mid-October.

China’s factory activity contracted for the tenth straight month in December and at a sharper pace than in November, the Caixin Purchasing Managers’ Index (PMI), which measures industrial activity in private and small enterprises, released Monday, showed. [USPMI=ECI].”It was quite unusual for the Fed to raise rates when the ISM is below 50, (which indicates contraction)”.

Workers of Tokyo Stock Exchange monitor stock prices on an electric screen during the first trading session of the year at the Tokyo Stock Exchange in Tokyo, Monday, Jan. 4, 2016.

The surveys came after an official one published on Friday, which focuses on larger, state-owned firms, showed a fifth month of contraction.

Brent crude gained 3%, rising as high as $38.40 after Saudi Arabia’s execution of a prominent Shia Muslim cleric ignited regional anger.

Investors also fear a glut of equity supply could swamp Chinese markets this year, with a six-month share sales ban imposed on listed companies’ major shareholders due to expire on Jan 8.

It’s far from a happy new year on Wall Street, where stocks have been sharply lower in early trading.

“As a number today’s trading is meaningless”, said Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem, Pennsylvania.