Percent Drop Closes Chinese Stock Markets; US, World Markets Also Slump

The FTSE 100 Index slumped 2.5 per cent, or 150.2 points to 6092.1, after Chinese stock markets were automatically suspended overnight following falls of at least 7 per cent amid weak factory output data from the world’s second largest economy.

The Swiss stock market ended the first trading session of the new year with a significant decline. The Nasdaq composite fell 104 points, or 2.1 percent, to 4,903.

Authorities in China have, for the first time, closed stock exchanges in Shanghai and Shenzhen markets early after shares fell seven percent, triggering sell-off elsewhere in Asia.

Share markets fell, while oil and gold prices rose, as rising tensions in the Middle East and more poor Chinese economic data spooked investors.

European indexes fell between 2 and 3 percent.

Under the Indian rules, a rise or fall of 10% in benchmark index triggers a trading halt across the market for 45 minutes, if such a movement takes place before 1 pm, while halt is of 15 minutes, if a 10% movement happens between 1 pm and 2.30 pm.

“It seems like fear woke up early in 2016 and hope is basically sleeping in”, said David Kelly, chief global strategist at JPMorgan Funds. A reading below 50 indicated contraction.

After Monday’s fall, the Shanghai Composite Index, which had soared to 5,178 points last June, now stands at 3,296.

The retreat comes after the S&P 500 fell 0.7 percent in 2014, its worst year since the 2008 financial crisis. Saudi Arabia announced Sunday that it was severing ties with Iran, hours after Iranian protesters set fires in the Saudi Embassy compound in Tehran. The S&P is down 2.3% in late morning trading. Additionally, tensions between Saudi Arabia and Iran escalated over the weekend after the Saudi government executed a prominent Shiite cleric, the denomination of Islam most common in Iran. – August 19: The Shanghai index declines 5 per cent but rebounds in the last minutes of trading to close up 1.2 per cent in what analysts say might have been the last major government intervention.

The Middle East tensions is already causing turbulence in the oil markets.

The onshore yuan traded as weak as 6.5140 to one USA dollar early Monday, its weakest level since April 2011.

The news boosted oil prices, with West Texas Intermediate up 1.4% to $37.56 a barrel and Brent crude 2.3% firmer at $38.12.

It is looking more and more like 2016 is going to be a year dominated by politics. Shares of Netflix plunged 7% after the streaming site was downgraded by analysts at Robert W. Baird due to concerns about USA subscriber growth.

US stocks are starting the new year with lots of volatility. The biggest companies are state-owned and their health is decided by official policy.