Q&A about the market turmoil in China and beyond

“As liquidity returns to markets at the start of the New Year, we are seeing a fairly uncomfortable start, with trading halted in Chinese equities”, noted economist Simon Smith at trading firm FxPro. Futures augured losses on Wall Street.

China’s stock market lurched lower again on Monday, triggering “circuit breakers” that halted trading.

The Dow Jones industrial average sank 347 points, or 2 percent, as of 9:35 a.m. ET.

– August 19: The Shanghai index declines 5 percent but rebounds in the last minutes of trading to close up 1.2 percent in what analysts say might have been the last major government intervention. The DAX index in Germany, whose export-led economy is sensitive to China’s fortunes, tumbled 4.2 percent to 10,288.22.

Financial analysts are also concerned about how the market will react when measures created to enhance stock market stability expire in the coming days.

As markets recommenced activity on the first Monday of 2016 it was a dramatic day for the Chinese CSI300 as a huge drop in the share index triggered an automatic “circuit breaker”, halting trading with immediate effect.

Trading had been halted earlier in the day for 15 minutes after the stock market fell by 5 percent. “Commodities continue to tell a story and while we can not fully attribute the sell-off to the weaker-than-expected manufacturing data; China and its weakening growth has been a theme for a number of years”.

Chinese stocks marked the start of the new year by getting frozen before they got absolutely obliterated due to the sharp fall in the wake of a disappointing manufacturing PMI report for December and further weakening in the Chinese yuan. The reading below 50 indicates a continued contraction. Riyadh cut ties with Iran after protesters stormed the Saudi embassy in Tehran.In the currency market, the safe-haven Swiss franc was bid up, gaining 0.4 percent against the euro to 1.0849 per euro.

The price of oil was partially helped by fresh political tensions in the Middle East. Saudi Arabia’s execution of a Shiite cleric, along with 46 others on Saturday, sparked official outrage and protest in Iran and several other countries.

Stocks around the globe got clobbered. In the quarter ending in September it fell to a six-year low of 6.9 percent.

In Hong Kong, the Hang Seng Index tumbled by 2.8 per cent in response. Japan’sNikkei 225 lost 3.1%.

Monday’s wave of selling began in Asia.

A new year for global stock markets has seen the reemergence of an old pattern, with huge declines in the Chinese stock markets echoing all over the world. That was a reaction to last year’s volatile markets, which dropped more than 40% over the summer. The move exacerbated fears of a more serious slowdown.