US stocks plunge at open after Chinese stock rout

The New York Stock Exchange invoked a rule saying market makers don’t have to disseminate price indications before the opening bell in an effort to make it easier and faster to open stocks on a volatile trading day.

Two weeks after China devalued its currency, the Dow Jones plunged more than 1,000 points on Monday morning, leading to widespread media coverage about the stock market in turmoil.

With Monday’s selloff, the S&P 500 index and the Nasdaq composite slipped into correction mode, joining the Dow, which slid into correction territory on Friday.

The latest bout of anxiety comes as global investors fear Chinese government officials may be unable to avert a serious slowdown in the world’s second-largest economy. This saw China’s main index – the Shanghai Composite – close at 8.5 percent down, after experiencing its worst day since August 2007.

The losses in US equities came with other rocky moves in global markets, including a drop in US oil prices below $40 a barrel and a sharp fall in the US dollar against other major currencies.

Earlier, China’s Shanghai index suffered its biggest percentage decline since February 2007, with many China-listed companies hitting their 10 per cent downside limits.

In its minutes from the central bank’s July meeting, released Wednesday, Fed officials expressed concern that China’s slowdown could pose risks to the U.S. economy.

After plunging 10 percent, stock of Cupertino-based Apple was up about 2 percent after 9:30 a.m. Monday.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 5.1 per cent to a three-year low. Its decline last week was 5.8 percent, so it already reached correction territory on an intraday basis. Citrix Systems was down the most among stocks in the S&P 500, shedding $5.26, or 7.1 percent, to $68.65.

Bernard Aw, market strategist at IG, told the Associated Press news agency: “There is a lot of fear in the markets”.

Both Chinese and U.S. stock markets had been on a tear for awhile. It sank the most since 2011 on Friday amid signs China’s economy is weakening, capping its single 5 per cent decline of the year after spending the previous seven months locked in a trading range that had no precedent in a century of market history. Brent crude, a benchmark for worldwide oils used by many U.S. refineries, fell $2.50 to $42.96 a barrel. And because global markets are so interconnected – with the U.S. and Europe heavily dependent on China’s products and its investment power – what happens there can affect stock markets overseas, too.

The euro meanwhile strengthened to $US1.1599 from $US1.1386 on Friday.

Panic selling ripped virtually across the whole of Asia, with shares in Hong Kong closing 4.77 percent lower and in Tokyo 4.61 percent down, while Seoul dropped 2.47 percent and Sydney lost 4.09 percent.