Asian markets nosedive after Chinese markets halt trading

HONG KONG - Chinese stocks nosedived on Thursday, triggering the second daylong trading halt of the week and sending share markets, currencies and oil prices lower as investor jitters rippled across Asia.

See Full Article

The benchmark Shanghai Composite Index tumbled 7.3 per cent to 3,115.89 before new "circuit breakers" suspended trading for the day. The smaller Shenzhen Composite Index slumped 8.3 per cent to 1,955.88.

Government measures introduced last year to prop up share prices after a meltdown in June are being gradually withdrawn while investors are also unnerved by possible signs China's economy is in worse condition than thought.

"The sell-off in Chinese equities we have seen this week only emphasizes the point that the stock market intervention may have only delayed the sell-off," said Angus Nicholson, market analyst at IG in Melbourne, Australia.

Chinese stock trading was also suspended on Monday after a plunge that roiled Wall Street and other global markets.

The Shanghai benchmark has dropped 12 per cent so far this year, which is barely a week old. Thursday's market plunge may have been exacerbated by investors rushing to sell before they were locked out, some analysts said.

The circuit breakers trip when there are big swings in the CSI 300 index. Trading halted temporarily barely 14 minutes into the morning session when stocks plunged 5 per cent. When trading resumed 15 minutes later, stocks plunged further, falling more than the 7 per cent limit that triggers a daylong trading freeze.

"There was some apparent panic selling with investors trying to reduce exposure before the mandatory triggers entered into effect," said Gerry Alfonso, trading head at Shenwan Hongyuan Securities in Beijing.

"Sentiment seems to be rather fragile at the moment as the soft macroeconomic environment together with the fear of not being able to sell during a market correction causing some anxiety among investors," he wrote in a note to clients.

Nicholson said, "It's difficult to see the circuit-breakers surviving long in their current form, given they only seem to be further contributing to the volatility in the Chinese market."

The latest slump comes after China's government guided the yuan sharply lower, in a sign that authorities are prepared to weaken the tightly controlled currency to boost flagging exports. The yuan rate was set Thursday morning at 6.5646 to the U.S. dollar, the weakest in nearly five years, the official Xinhua news agency reported, citing data from the China Foreign Exchange Trading System.

Among other Asian stock markets, Japan's benchmark Nikkei 225 index fell 2.3 per cent to 17,771.97 and South Korea's Kospi lost 0.9 per cent to 1,907.32.

Hong Kong's Hang Seng shed 2.8 per cent to 20,401.54 and Australia's S&P/ASX 200 retreated 2.2 per cent to 5,010.30.

Benchmarks in Taiwan, New Zealand and Southeast Asia also fell.

Oil prices touched their lowest in more than a decade. Benchmark U.S. crude futures fell 85 cents, or 2.5 per cent, to $33.10, the lowest price since January 2004, in electronic trading on the New York Mercantile Exchange. The contract on Thursday dropped $2, or 5.6 per cent, to settle at $33.97 a barrel. Brent crude, a benchmark for international oils, fell $1.14, or 3.3 per cent, to $33.09 a barrel in London.

In currency markets, the dollar fell to 117.95 yen from 118.67 yen in the previous day's trading as investors bought the yen as a safe haven.

Some other Asian currencies retreated in concert with the yuan. The dollar gained 0.1 per cent against the South Korean won and rose 0.3 per cent against India's rupee. The Australian dollar fell 0.6 per cent.

The euro rose to $1.0825 from $1.0778.



Advertisements

Latest Economic News

  • Obama administration urges Canada to reverse Super Bowl ad decision

    Economic CTV News
    OTTAWA - In one of its final communications with Canada, the outgoing Obama administration is engaging in pigskin politics: asking the Trudeau government to overturn a regulation affecting ads during the Super Bowl. The U.S. Source
  • Oil and stock prices higher as Donald Trump sworn in

    Economic CBC News
    Stock markets responded to the first day of the Trump Administration in a largely positive way, with the Dow Jones, the Nasdaq and the S&P 500 all higher on the day of his swearing in. The Dow Jones Industrial Average was up by nearly 100 points to 19,829 just minutes before the new president formally acceded to the position. Source
  • Navdeep Bains defends open borders for global trade in Davos speech

    Economic CBC News
    Automakers on both sides of the border fear the potential negative effects of a Donald Trump presidency, Canada's economic development minister said Thursday as he met with international business and political leaders in Switzerland. Navdeep Bains said he's been having nervous conversations with concerned automakers, both at the recent auto show in Detroit and during his current visit to the World Economic Forum in Davos. Source
  • Will Trump end globalization? The doubt haunts Davos' elite

    Economic CTV News
    DAVOS, Switzerland -- It's been impossible to escape the shadow of Donald Trump at this year's gathering of the business elites at the World Economic Forum in Davos, Switzerland. Uncertainty over what Trump will do once he takes office Friday and whether his presidency will mark the end of globalization dominated discussions all week at this event, which more than any has become synonymous with international business. Source
  • Sears, N.B. partner for a 2nd new business centre expected to create 360 jobs

    Economic CTV News
    TORONTO -- The New Brunswick government and Sears Canada Inc. announced their second partnership this week to open a business centre in the province with the help of millions of dollars of government funding. The provincial government is providing Sears (TSX:SCC) with about $5.2 million of funding to open its second new business centre in the province. Source
  • Canada's inflation rate rises to 1.5 per cent in December: StatsCan

    Economic CTV News
    OTTAWA -- Canada's annual pace of inflation ticked higher in December, but the rate was weaker than expected as lower food prices helped offset increases in the transportation and shelter groups. Statistics Canada said Friday the consumer price index in December was up 1.5 per cent from where it was a year ago, a higher rate of inflation compared with November's increase of 1.2 per cent. Source
  • Cheaper food offsets December hike in gasoline: StatsCan

    Economic CTV News
    OTTAWA -- Canada's annual pace of inflation ticked higher in December, but the increase was smaller than expected as lower food prices helped offset gasoline price increases at the pump. Statistics Canada said Friday the consumer price index in December was up 1.5 per cent from where it was a year ago, a higher rate of inflation compared with November's increase of 1.2 per cent. Source
  • Tim Hortons owner launches app to pay-and-go with no lining up

    Economic CBC News
    The parent company of Tim Hortons and Burger King plans to launch an app Canada-wide this spring that would allow customers to order and pay in advance on their smartphone without lining up to pay a cashier. Source
  • Tim Hortons, Burger King to launch app in push towards automation

    Economic CTV News
    TORONTO - The parent company of Tim Hortons and Burger King plans to launch an app Canada-wide this spring that would allow customers to order and pay in advance on their smartphone without lining up to pay a cashier. Source
  • Sharp increase in Americans interested in Canadian real estate: Royal LePage report

    Economic CTV News
    TORONTO - A new report from Royal LePage suggests many Americans who oppose incoming president Donald Trump continue showing a desire to purchase property in Canada. In a report released early Friday, the company says American web traffic on its website surged 329 per cent the day after the U.S. Source