Stocks slump on new China worries; oil falls to 12-year low

In Europe, the FTSE 100 index of leading British shares was up 0.9 percent at 6,005 while Germany’s DAX rose 1.1 percent to 10,091.

Investors also cheered as China stopped allowing its currency to lose value.

On Thursday, Chinese stock trading halted for the day after a key index known as the CSI 300 plunged 7 percent, tripping a “circuit breaker” that is meant to dampen volatility. On Wednesday the price of USA crude closed at its lowest since December 2008.

Stocks were hit hard Thursday following China’s largest downward adjustment to the yuan since August. Mutual fund managers say China’s actual economic growth could be closer to 4 percent.

Apple shares snapped their three-day losing streak and were up 0.5 percent, giving the biggest boost to the three major indexes.

The mechanism, which was implemented at the beginning of the year, has been triggered twice this week.

“The management of the Chinese economy is the real concern”, said John Canally, chief economic strategist at LPL Financial.

The Dow Jones industrial average skidded 308 points, or 1.8 percent, to 16,598 as of 1:23 p.m. Eastern. The gauge fell 6 percent this week. The Standard & Poor’s 500 index picked up 4 points, or 0.2 percent, to 1,947. The Nasdaq composite sank 9 points, or 0.2 percent, to 4,680.

The tech-rich Nasdaq index closed down 3%.

Asian stocks are rebounding today after the severe fall yesterday caused by yuan depreciation in China and the upward movement may support the European markets today.

The price of US crude oil plummeted to its lowest level in almost 12 years because of worries that the slowdown in China will translate into lower demand for energy.

SK Hynix fell 1.66 percent and Samsung C&T retreated 0.7 percent. USA crude fell 27 cents to $33 a barrel in NY and Brent crude, a benchmark for worldwide oils, declined 56 cents to $33.19 a barrel in London. It has been trading at 11-year lows.

Several mining companies also fell along with the price of copper. Financial stocks also slumped.

The weekly declines on the S&P and Dow, 6 percent and 6.2 percent, respectively, were the largest for any week going back to September 2011. Exxon and Chevron fell about 1.5 per cent weighing the most on the Dow and S&P. The Nasdaq, down over 6% in 2016, is off to its bleakest start since 2000. Those fears have drowned out signs that the United States and Europe are doing fairly well.

“China’s been such a big driver of global growth for 15 years and now they’re not, and they don’t seem to have a plan for the next 15 years”, Canally said.

The dollar climbed on measures taken by China to ease this week’s market turmoil and on the USA payrolls data, but gains were limited by worries over whether Beijing has done enough to calm its battered stock market. Natural gas rose 11.5 cents, or 5.1 percent, to $2.382 per 1,000 cubic feet.

The report has brought mostly good news in recent months. Silver declined 42.6 cents, or 3 percent, to $13.918 an ounce. Macy’s lost 88 cents, or 2.4 percent, to $36.01. Its stock has plunged 85 percent over the last two years. The energy index, down 1.09 per cent, was the lone decliner among the major S&P sectors. The CAC-40 in France slid 1.2 percent.

The euro fell to $1.0903 from $1.0927 and the dollar edged up to 117.67 yen from 117.50 yen late Thursday.