Global stock prices collapsed on Thursday and oil prices fell to their lowest level in more than a decade after renewed volatility in China forced another early shutdown in Shanghai and Shenzhen.
Global equities fell for a sixth consecutive day on Thursday, triggered by another sharp selloff in mainland China. The Shanghai Composite Index plunged 7% to 3,125.00. The Shanghai Shenzhen CSI 300 Index also fell 6.9% to 3,294.38, triggering the market’s circuit breaker for the second time in four days. Thursday marked China’s shortest trading day in its 25-year history.
China’s financial tumult spread throughout Asia and the world. In Tokyo, the Nikkei 225 Index fell 424 points or 2.3% to 17,767.34. Hong Kong’s Hang Seng Index also plunged 3.1%.
European markets were down across the board, with the German DAX falling 3% in intraday trade. London’s FTSE 100 Index was also down 2.4%. The STOXX 600 Index, which represents 600 large-, mid- and small-cap companies across Europe, was down 2.4%.
American stock futures took a beating Thursday morning. The major averages opened sharply lower after the bell, with the Dow Jones Industrial Average falling more than 200 points or 1.3%. The S&P 500 Index fell 1.4%, while the Nasdaq Composite also declined 2%.
Ongoing market turmoil in China also weighed on oil prices, which have declined 12% since Tuesday, marking the worst three-day rout in a year. North Sea Brent touched a low of $32.16 a barrel on Thursday, its lowest level on the ICE Futures exchange since April 2004. It would later settle at $33.41 a barrel, declining 82 cents or 2.4%.
The West Texas Intermediate (WTI) benchmark for US crude fell to $32.10 a barrel, its lowest level on the New York Mercantile Exchange since December 2003. US oil futures would settle down 86 cents or 2.5% at $33.11 a barrel.
2016 is shaping up to a be a volatile year for the global financial markets, as uneven growth, a slowdown in China and a worsening oil supply glut continue to drag on investor sentiment. Renewed Chinese volatility has also raised concerns about the yuan renminbi, which was guided lower again on Thursday by the People’s Bank of China (PBOC). That marked the eighth consecutive day the yuan’s midpoint rate was set lower versus the dollar.
Based out of Toronto, Canada, Husni Sam Borji is senior macroeconomics analysts who contributes regularly to TradersDNA, where he examines the global financial markets. Husni Sam has authored dozens of government reports and industry whitepapers, as well as thousands of financial articles. Husni Sam holds a BA from the University of Windsor and a Master’s degree in Economic Public Policy from McMaster University.
His expertise includes macroeconomics, fundamental analysis, industry research and global political economy.