US Markets Plunge After China Halts Trading

The benchmark USA rebounded moderately in Asian daytime hours, rising 67 cents to $33.94 in electronic trading on the New York Mercantile Exchange.

US stocks were lower on Thursday, as China lowered the yuan’s reference rate further and crude continued retreating.

CHINA RELIEF: Investors around the world were relieved Friday by a steadier tone in Chinese trading.

On Tuesday, the Chinese stock market regulator maintained a ban on trading by major shareholders and company directors which had been in force since July 8. The benchmark Shanghai Composite Index rose 2 percent to 3,186.41 a day after trading was suspended following a 7 percent plunge. The Nasdaq composite index fell 69 point, or 1.4 percent, to 4,766.

The Dow plunged as many as 320 points before cutting its losses Thursday.

“The great concern for global markets is that the dramatic pace of the currency devaluation seems to indicate a far greater weakness in the Chinese economy than is easily perceivable in its publicly released statistics”, Nicholson said. Citigroup gave up $1.24, or 2.5 percent, to $48.88.

ASIA’S DAY: In other Asian markets, Hong Kong’s Hang Seng advanced 0.6 percent to 20,453.71 and South Korea’s Kospi added 0.7 percent to 1,917.62.

The Footsie tumbled 119.30 points to close 1.96 percent in the red at 5,954.08, led lower by mining stocks.

European markets also fell.

The S&P 500 index gave up 47.17 points, or 2.4 percent, to 1,943.09.

Fears of a slowdown in China have been growing for years, and the inscrutable nature of the government-managed economy and stock market leaves investors without reliably transparent information. Earlier this week, economic data caused investors to worry about China’s manufacturing and service industries. Thursday’s selling was linked to weakness in the yuan, as the government’s decision to let the currency get weaker may be a bad sign for the health of China’s economy.

For the second time in four days, trading in China was halted early by circuit breakers after a seven percent stocks plunge.

The mechanism, which was implemented at the beginning of the year, has been triggered twice this week. The Dow average is down 9.8 percent from its peak in May, and the S&P 500 index has lost 8.8 percent since then. Even though oil’s plunge has been mostly driven by oversupply, cheap oil also raises concerns it’s signaling something alarming about poor demand due to slower global growth.

Brent crude, used to price global oils, rose 70 cents to $34.45 a barrel in London. Gold, on the other hand, was up as much as 0.8% to reach a two-month high, trading at $1,102.85 an ounce.

The price of copper fell 2.6 percent, however. Among energy companies, shares of BG Group PLC dropped 6.3% and BP PLC lost 5.3%.

Homebuilder KB Home slumped after its fourth-quarter results fell short of Wall Street estimates. Natural gas declined 5.6 cents, or 2.5 percent, to $2.267 per 1,000 cubic feet.

Macy’s rose 2.1 per cent as it unveiled US$400 million in job cuts and store closures following a disappointing holiday shopping season. The dollar fell to 118.38 yen from 118.97 yen late Tuesday.