Chinese stocks dive again for 4th straight day
(Close): Wall Street fell for a fifth consecutive trading session amid a dramatic global sell-off as fears over China’s slowing economy intensified.
MSCI’s all country world index is up 0.2% in Asia after falling 3.8% on Monday to a 10-and-a-half-month low, its biggest fall in nearly four years.
After a year of heady gains, Chinese markets have been buffeted by increasing signs that economic growth is faltering, and the central government’s efforts to reassure and backstop stock investors have been sunk by a succession of weakening indicators. “Even the shares that had little business ties with China were sold”, Daiwa Securities senior strategist Yukino Yamada said.
The Nasdaq Composite dropped 179.79 points, or 3.82 percent, to 4,526.25, also in correction. Stocks closed down more than 8 percent in Shanghai and more than 4 percent in Tokyo. That means it’s on track for its worst selloff since 2011, when the U.S. lost its AAA rating.
“If things don’t settle down in China, we could have another ugly open tomorrow and you wouldn’t want to be caught holding positions you bought this morning”, said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin.
The global market decline is extending to commodities, including crude oil, which is below $40 per barrel for the first time since the financial crisis six years ago.
Some US investors went bargain hunting after the dip, causing at least some of the accelerated selling toward the day’s end, according to Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas. Its enormous appetite for raw materials like oil, copper and iron ore fueled global growth, especially in emerging markets like Brazil that are rich in natural resources.
China’s benchmark Shanghai Composite Index lost 205.78 points to 3,004.13.
Oil is a lifeline of economic growth for many developing countries, which are also seeing their currencies lose value because of their economic exposure to China. He urged China to move toward reforms, including a market-determined exchange rate system and more transparent economy. The yield on the 10-year Treasury note fell to 2 percent.
But the index later trimmed its losses and was down 5 percent to 3,050.10.
China-linked shares led the falls, which spilled over into European and US equities, with Shanghai closing down 8.49 per cent, or 297.83 points, to 3,209.91, the biggest daily loss since February 27, 2007. The Dow was confirmed to be in a correction on Friday.