US stocks and oil prices slump due to China slowdown fears

The latest freakout on Wall Street comes as China’s stock market crashed 7% overnight, losses so severe that trading had to be halted in the first half hour and the markets remained closed for the rest of the day. The price of US crude oil plunged to its lowest level since 2004 as traders anxious that weakness in China would translate into lower global demand for energy. A woman reacts near a display board showing the plunge in the Shanghai Composite Index at a brokerage in Beijing, China, Thursday, Jan. 7, 2016. The indices did not go out on the lows, but the fall is not pretty.

China’s stock market is in complete disarray.

In an unexpected development, the China Securities Regulatory Commission said it will suspend the new “circuit-breaker” safeguard – which has only been available for four days – because it appears to be causing substantial losses instead of controlling them. Apple slid 4.2 per cent, Amazon 3.9 per cent, Facebook 4.9 per cent and Google parent Alphabet 2.3 per cent.

Dow e-minis were up 189 points, or 1.15 percent, with 85,832 contracts changing hands at 8:36 a.m. ET (1336 GMT). The Dow lost 392.41 points, or 2.3 percent, to 16,514.10. At one point it was down 442 points.

Since the market’s close on New Year’s Eve, the Shanghai Composite Index is down 11.7 percent, while the S&P 500, the broader measure of USA stocks, is off 4.9 percent. All 10 of the S&P 500 industrial sectors are trading lower.

Other global markets also fell.

“There is a wall of worry under full construction, brought on by China, fall in oil prices and uncertainty regarding quarterly earnings”, Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis, told Reuters. About 10 billion shares traded hands on US exchanges, 42 percent above the three-month average.

The New Year has been a new low for recent market numbers. That set off another slump in Asian and European stocks. Citigroup gave up $2.56, or 5.1 percent, to $47.56. On the Big Board, decliners outpaced advancers by 6.2-to-1, and on the Nasdaq, decliners led by 6.1-to-1. In the last few days that has drowned out signs that the United States and Europe are doing fairly well.

Thursday’s selling came after the Chinese government allowed its currency to weaken against the dollar in a reflection of sluggishness in the country’s giant economy.

“They suddenly realized this is not a great idea”, said Tuchman. The precious metal soared 4% to $1,103 an ounce.

Shares of Apple were down 2.8 per cent at $US97.87, following reports of slowing shipments of the iPhone 6S and 6S Plus.

Macy’s rose 2.1% as it unveiled $400 million in job cuts and store closures following a disappointing holiday shopping season. The dollar fell to 117.92 yen from 118.38 yen late Thursday.