China stocks volatile after global selloff

United States stocks tumbled on Monday, putting the Dow on track for its worst start to a year since 1932 after weak Chinese economic data fanned fears of a global slowdown.

“It’s going to be a turbulent year”, said Kevin Kelly, chief investment officer of Recon Capital Partners.

Tokyo stocks plunged on the first trading day of the New Year as below-par manufacturing data from China compounded a dour market mood, with sentiment initially dashed by Wall Street’s slump at the end of last year.

The sell-off was so steep in China – trading was halted. Saudi Arabia executed a prominent Shiite cleric, prompting Iranian protesters to set fire to the Saudi Embassy in Tehran on Sunday.

The run from risk boosted U.S. Treasuries where yields on 10-year notes dropped 3 basis points to 2.24 percent. According to CNBC, the index briefly dipped below 2,000 level in day trade for the first time since the middle of December.

China sports the world’s second-largest economy. It also comes after the index fell 2% in 2014, its worst year since the 2008 financial crisis.

Nasdaq led the day’s decline and Amazon (AMZN.O), down 5.8%, weighed the most on the S&P 500 and Nasdaq, while the Nasdaq Biotech Index dropped 3.2%.

Huang Cengdong an analyst for Sinolink Securities in Shanghai said selling accelerated as investors tried to lock in trades before activity was halted.

The bank’s troubling outlook for the dollar, outlined in a report titled, “Return of the Northern Peso”, suggested that tight corporate spending, a “non-trivial” chance of further monetary easing and a subdued outlook for oil prices all factored into its pessimistic view.

The Hang Seng of Hong Kong was around 1 per cent lower in late trading, while Japan’s Nikkei closed 0.42 per cent lower. South Korea’s Kospi closed 2.2 percent lower.

China’s latest intervention saw the London market staunch the declines as it boosted FTSE-listed commodities stocks such as Fresnillo and Glencore. If its growth continues to slow, it could mean China buying less USA products.

The selloff was fueled by a new manufacturing survey by Caixin that fell to 48.2 in December following two months of stabilization. Earlier last month, Chinese government figures showed the official manufacturing PMI had increased slightly to 49.7 from 49.6 in November, still the fifth month of contraction. Trading on the Shanghai and Shenzhen stock exchanges was ended early on January 4 after shares fell seven per cent, the first time China’s new “circuit breaker” intervened to curb market volatility.