Chinese stocks volatile a day after abrupt sell-off

Whether China’s latest market upheaval is by design or default, it’s little surprise that investors are increasingly assuming the worst.

Tech stocks and small-company shares have been hit even harder.

It’s been yet another historic day for the Chinese stock market with the whole shebang managing to shut itself down after just 15 minutes of trading.

At 9.42 a.m., trading was suspended for 15 minutes after the Hushen 300 dropped by over five percent. That set off another slump in Asian and European stocks.

The Dow Jones Industrial Average plunged 392.41 points (2.32%) after trading in China was halted for the second time this week.

The CSI300 index rose 2.8 percent, to 3,384.99 points at the end of the morning session, while the Shanghai Composite Index gained 2.4 percent, to 3,199.56 points.

In Japan, the benchmark Nikkei 225 index fell 1.2% to 17,562.23 as concerns remained about a deeper than expected slowdown in the Chinese economy.

Experts blame the global market plunge on investor worries that growth is slowing in China, the world’s second-largest economy and a source of global economic growth for many years.

This also affected stock markets around the world.

“These include the resumption of fears over global growth following weak data from China… while increased geopolitical tensions between Saudi Arabia and Iran and an unexpected nuclear test from North Korea have also encouraged investors to dodge away from riskier assets”.

The DAX, Germany’s benchmark stock index, is off 7% for the year already and France’s CAC 40 is down 5%.

The sell-off came after China allowed its currency to weaken further, a unsafe omen for the world’s second-largest economy. “Thus, the China Securities Regulatory Commission (CSRC) had chose to suspend the circuit breaker mechanism to maintain market stability”.

The Chinese government launched the circuit breaker system at the start of this year in an attempt to control the volatility of the Chinese market, which has been experiencing extreme highs and lows since June of 2015.

The price of oil continued a protracted slide.

The malaise spread across continents, sending indexes sharply lower in the USA and Europe. It sank 70 cents, or 2.1 percent, to $33.27 a barrel. Those prices have been falling for years, but gold prices have recovered recently and are at their highest price in about two months. The NASDAQ Composite index is at 4,739 – about 2 percent lower than its opening level. Natural gas rose 11.5 cents, or 5.1 percent, to $2.382 per 1,000 cubic feet.

Market analysts have been saying that stocks around the globe had become severely “oversold” due to the intense selling to start the new year.