World markets slump after Chinese stock plunge triggers 2nd daylong trading halt

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

See Full Article

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

Chinese government measures introduced last year to prop up share prices after a meltdown in June are being gradually withdrawn, leading to volatile trading. Investors are also unnerved that Beijing has allowed the yuan to weaken, a possible sign the No. 2 economy is in worse shape than thought.

Angus Nicholson, market analyst at IG in Melbourne, Australia said the sell-off this week only underlines that the Chinese government's intervention last year to support the market had delayed the inevitable slump.

"Many people are asking how far Chinese equities could fall," he said in a market commentary.

"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.

Chinese stock trading was also suspended on Monday after the market plunged.

The tempest in China's markets has been felt around the world. Foreign investors have little direct involvement in Chinese financial markets, but the size of China's economy means the wild gyrations are a source of concern internationally.

The latest slump comes after China's government guided the yuan lower over several days, an indication 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.

In early European trading, France's CAC 40 was down 2.5 per cent at 4,367.97 and Germany's DAX slid 3.1 per cent to 9,899.50. Britain's FTSE 100 cratered 2.3 per cent to 5,933.74. Futures augured sharp losses on Wall Street. Dow and S&P 500 futures were each down 2 per cent.

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 by the automatic trading suspension, 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."

Among other Asian stock markets, Japan's benchmark Nikkei 225 index fell 2.3 per cent to 17,767.34 and South Korea's Kospi lost 1.1 per cent to 1,904.33.

Hong Kong's Hang Seng shed 3.1 per cent to 20,333.34 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 $1.43, or 4.2 per cent, to $32,54 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 $1.24, or 3.7 per cent, to $32.99 a barrel in London.

In currency markets, the dollar fell to 117.66 yen from 118.67 yen in the previous day's trading as investors bought the Japanese currency as a safe haven. Some other Asian currencies retreated in concert with the yuan. The euro rose to $1.0795 from $1.0778.



Advertisements

Latest Economic News

  • What's driving the softwood lumber dispute?

    Economic CTV News
    The U.S. federal government announced Monday that it’s imposing “countervailing duties” on Canadian softwood lumber of up to 24.12 per cent. Observers warn that could mean thousands of jobs lost in Canada’s forestry sector, because our exports will suddenly become that much more expensive for Americans to buy. Source
  • U.S. imposes preliminary duties up to 24% on 'subsidized' Canadian softwood lumber

    Economic CBC News
    Canada's forest industry felt the slap of the countervailing duties they were bracing for late Monday, with confirmation out of Washington that a U.S. Commerce Department investigation has once again concluded that softwood lumber imports are unfairly subsidized. Source
  • Barrick Gold sees profits rise in quarter but misses analyst expectations

    Economic CBC News
    Barrick Gold's first quarter results fell short of expectations despite swinging to a profit of $679 million US compared to a net loss of $83 million US in the same quarter last year. The gold mining giant said that once adjusted, net earnings came in at $162 million US or $0.14 per share, compared with $127 million US or $0.11 per share in the first quarter of 2016. Source
  • CN raises 2017 outlook on record Q1 volumes, helped by higher grain

    Economic CBC News
    Canadian National Railway raised its outlook for the year after profits increased 12 per cent on record first-quarter volumes, helped by an increase in Western Canadian grain. The Montreal-based railway said Monday it expects to earn between $4.95 and $5.10 per adjusted diluted share for the year, an increase of eight to 11 per cent from last year. Source
  • Redwater Energy decision that gives creditors priority over environment upheld by Appeal Court

    Economic CBC News
    Decision could affect handling of abandoned wells across Alberta By Tracy Johnson, CBC NewsPosted: Apr 24, 2017 2:11 PM MTLast Updated: Apr 24, 2017 2:11 PM MT Source
  • Creditors over environment: Alberta Court of Appeal upholds Redwater Energy decision

    Economic CBC News
    Decision could affect handling of abandoned wells across Alberta By Tracy Johnson, CBC NewsPosted: Apr 24, 2017 2:11 PM MTLast Updated: Apr 24, 2017 2:11 PM MT Source
  • Law society urged to adopt $25K cap on referral fees in Ontario

    Economic CTV News
    TORONTO -- Lawyers in Ontario should have their fees for referring clients to another lawyer capped at a maximum of $25,000, a report released on Monday recommends. In addition, the report says lawyers should have to record referral fees paid or received in their books, and report on their referral-fee practices in their annual reports to the body that regulates the profession in the province. Source
  • Car rental companies agree to pay $1.25M penalty for advertising impossible discounts

    Economic CBC News
    Two of Canada's largest car rental companies have agreed to pay $1.25 million in penalties for falsely advertising discount prices that are essentially impossible to obtain. Canada's Competition Bureau has reached what it calls a "consent agreement" with Hertz and Dollar Thrifty whereby both companies will pay penalties totalling $1.25 million and "ensure their advertising complies with the law and implement new procedures aimed at preventing advertising issues in the future. Source
  • Guide to 'fake news' wins $30,000 National Business Book Award

    Economic CTV News
    TORONTO -- A timely guide to distinguishing fact from fiction in the era of "fake news" was announced Monday as the winner of the $30,000 National Business Book Award. Neuroscientist Daniel J. Levitin said he was prompted to write "A Field Guide to Lies: Critical Thinking in the Information Age" (Allen Lane Canada) as a response to the "Balkanization of the news over the last 15 years. Source
  • Montreal couple hid winning $55M lottery ticket in daughter's toy box

    Economic CTV News
    MONTREAL -- A Montreal couple who won $55 million in a lottery jackpot hid the winning ticket in their daughter's toy box over the weekend. Nathalie Langlais and Gilles Rosnen picked up their winnings at Loto-Quebec headquarters in Montreal on Monday, three days after the Lotto Max draw. Source