Chinese markets open higher after day’s suspension

(AP Photo/Mark Schiefelbein). Chinese investors use a computer terminal to check stock prices in a brokerage house in Beijing, Friday, Jan. 8, 2016.

Peter Boockvar, chief market analyst at The Lindsey Group, said removing the circuit breakers could take some short-term pressure off Chinese stocks – but won’t be a cure-all.

(AP Photo/Mark Schiefelbein). Chinese investors monitor stock prices in a brokerage house in Beijing, Friday, Jan. 8, 2016.

Wall Street had already faltered on Wednesday, with dealers spooked by a World Bank report cutting its global growth forecasts again. The smaller Shenzhen Composite Index slumped 8.3 percent to 1,955.88.

Analysts said the market was likely being supported by buying from Chinese government entities that have been dubbed the “National Team”.

The mechanism was meant to calm China’s notoriously volatile markets – which went into a tailspin in mid-2015 – by automatically suspending trading for 15 minutes if they fell by five percent in one day, and closing them early if they dropped seven percent. “We need to see stability in oil prices and China”.

The Shanghai benchmark has dropped 12 percent so far this year, which is barely a week old.

In New York, the Dow Jones average of 30 stocks was up 17.33 points at 16,531.43, after falling almost 400 points on Thursday.

KEEPING SCORE: In Europe, the FTSE 100 index of leading British shares was up 0.9 percent at 6,005 while Germany’s DAX rose 1.1 percent to 10,091.

China has suspended a circuit-breaker implemented at the start of the year to stop trading for the day when the benchmark index fell 7%.

In a tacit admission that the solution is worse than the problem, China’s securities regulator suspended its new stock market circuit breakers just four days after instituting them. Hong Kong’s Hang Seng advanced 1.1 percent to 20,559.34 and Seoul’s Kospi was little changed at 1,903.14. The CAC-40 in France was 0.6 percent higher at 4,428.

Chinese investors watch stock market movements at a securities company in Beijing. The dollar had risen over the previous year, leaving the yuan overvalued compared with other developing countries and hurt Chinese exporters.

China’s central bank set a weaker yuan guidance rate for the eighth day, pushing offshore yuan to its lowest level since March 2011.

However, weak data on USA manufacturing, construction spending, auto sales and export growth prompted economists to slash their fourth-quarter GDP growth estimates by as much as one percentage point to as low as a 0.5 per cent annual pace. Rising interest rates in the US and worries about the health of China’s economy are also contributing to the exodus of funds.

The price of USA crude oil plunged to its lowest level since 2004 as traders anxious that weakness in China would translate into lower global demand for energy.

The currency hoard shrank by a record $108bn to $3.33-trillion last month, the People’s Bank of China (PBOC) said on Thursday.