Another sharp fall forced China’s stock market to close less than 30 minutes after trading began Thursday, setting up another rough day for investors. In the first half-hour of U.S. trading, the Dow Jones index fell by more than 1.2 percent — and that was after clawing back 90 points of an initial drop.
After trading in China was halted automatically the second time this week, officials said Thursday that they’re suspending the “circuit breaker” that shuts down the market if a key index falls by 7 percent.
“Currently, negative effects of the mechanism are larger than positive effects,” China Securities Regulatory Commission spokesman Deng Ke tells state-run Xinhua News.
NPR’s Jim Zarroli reports that China’s plunge “also sent the price of commodities down around the world. Crude oil fell to its lowest level in 12 years.” In the U.S., Jim adds, “stock prices have already had their worst three-day opening for the year since 2008.”
Update at 10 a.m. ET: Dow Jones Drops, With A Slight Bounce
After an initial steep fall of nearly 300 points, the Dow Jones Industrial Average benchmark is now at 16,702 — a drop of 203 points, or about 1.2 percent. The NASDAQ Composite index is at 4,739 — about 2 percent lower than its opening level.
Our original post continues:
Hours before the U.S. markets opened, stock futures for the Dow Jones index were sharply down, by more than 380 points. Futures for Brazil’s Bovespa index were down 850 points.
By midday in Europe, large indexes in Britain and France had fallen by nearly 3 percent and Germany’s benchmark DAX index dropped by more than 3.5 percent. Those indexes were seeing their lowest points in three or more months.
The rough start to 2016 is being blamed on several factors.
China’s central bank has let its currency weaken to a near five-year low; Chinese investors say there are problems with how the “circuit breaker” is being used — that it robs them of a chance to lift the markets back up; and analysts say officials aren’t releasing enough information about the mechanism and China’s policies.
“The China Securities Regulatory Commission should go to hell,” government official Zhong Linshu tells the South China Morning Post.