Shanghai index hits 1-year low, other markets also lower

“Equities were getting a bit slippery before the drop in oil, but once oil started to turn, equities started to gain momentum to the downside”, said Brad Bechtel, managing director of foreign exchange at Jefferies in NY.

Traders work at their desks in front of the German share price index, DAX board, at the stock exchange in Frankfurt, Germany, January 11, 2016. Consumer discretionary stocks were among the biggest decliners. The stock gained 27 cents to $30.58.

In Europe, both Germany’s Dax and France’s CAC 40 were down 3%, while the FTSE 100 fell roughly 2%.

Overnight, oil producers to miners and biotechnology stocks, some of the most beaten-down corners of the market, carved out sharp gains in the U.S. The Dow Jones Industrial Average rose 1.4% and the S&P 500 rose 1.7%.

China’s exports measured in dollar terms fell for the sixth-straight month in December compared with a year earlier, underscoring the headwinds faced by the world’s second-largest economy. Exports fell in dollar terms but the decrease was smaller than November’s. The data suggest a weakening in the yuan may be helping boost demand for Chinese products, providing welcome support for the slowing economy. Late in the day Shanghai shares succumbed to selling pressure, reflecting persisting worries that recent market gyrations are a sign that the authorities are struggling to manage the slowdown in the world’s No. 2 economy.

Indeed, China’s crude oil imports hit a record high. The figures came against a backdrop of contracting global trade previous year, meaning China’s export performance was relatively strong.

China’s main stock indexes fell, with the Shanghai Composite Index down 1.1 percent at the midsession interval, and the CSI300 index down 0.6 percent, below their September lows.

Exports declined 1.4 per cent from a year earlier to $224.1 billion, an improvement over the previous month’s 6.8 per cent contraction, customs data showed Wednesday. South Korea’s Kospi and Australia’s S&P/ASX 200 added 1.3 percent. Shares in Southeast Asia and New Zealand also were higher.

US West Texas Intermediate crude (WTI) was up 98 cents at $31.42 a barrel, recovering from Tuesday’s dip below $30. Brent futures went up by 1.72% to $31.39 per barrel, as of 3:20 AM EST. It was buying 117.38, down about 0.2 per cent. The euro edged up about 0.1 per cent to $1.0889.

Onshore the yuan was up 0.1% on the week but it is almost 1.4% weaker against the dollar for the year so far and has lost almost 5% since August, while a gap of more than 1% opened up with the currency offshore, despite the central bank’s efforts to deter speculation.