Asian shares tumbled to a 1 1/2-year low on Wednesday and the safe-haven yen rallied as Chinese stocks struggled to pull out of a tailspin, shaking investors already rattled by Greece’s debt crisis.
The drop in China extended a savage correction that has clipped 30% off Chinese shares since mid-June, threatening a new blow to the country’s already slowing economy despite a slew of market support steps from Beijing, Live Mint reported.
MSCI’s broadest index of Asia-Pacific shares outside Japan wallowed at its lowest level since February 2014, extending its early losses after Chinese shares opened sharply lower. It was last down 2.7%.
Japan’s Nikkei stock index fell 2% to a seven-week low, roiled by both China’s dent to regional sentiment and the stronger Japanese currency.
“Today is all about China, with Greece in the background now that it’s been given a new deadline,” said Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank in Tokyo.
“Shanghai’s early losses were like a cliff-dive, which had a huge impact on investor sentiment.”
Shanghai’s benchmark composite index was off its session lows but still down 3.9%, while the CSI300 index of the largest listed companies in Shanghai and Shenzhen slipped 4.8%.
Over 500 China-listed firms announced trading halts on the Shanghai and Shenzhen Exchange on Wednesday, taking total suspensions to about 1,300–45% of the market—as companies seek shelter from the rout.
Shares Oscillate
European shares oscillated between slight losses and gains Wednesday, a day after eurozone leaders gave Greece a Sunday deadline to come up with new economic measures to avoid tumbling out of the currency union. Having fallen 1.6% in the previous session, the Stoxx Europe 600 rose 0.1% in early trade.
The index has endured a turbulent few weeks, largely buffeted by headlines on Greece. It is up close to 9% so far this year but down more than 3% over the past month.
Germany’s DAX rose 0.3% on Wednesday and France’s CAC-40 added 0.7%. In southern Europe, Italy’s FTSE MIB was up 1.3% and Spain’s IBEX was up 0.7%, following sharp falls on Tuesday.
In Debt Markets
In debt markets Wednesday, the yield on the 10-year German government bond was slightly higher at 0.64%. The yield on 10-year Italian debt was broadly unchanged at 2.25% in early trade. The yield on Spanish 10-year benchmark bonds was at 2.24%, marginally lower on the day. Yields fall as bond prices rise.
Barclays shares rose 3.1% in early trade after the British bank announced that Chief Executive Antony Jenkins would leave.
The bank said Chairman John McFarlane would act as executive chairman until it found a replacement for Jenkins.
In commodity markets, Brent crude was 1.1% lower at $56.24 per barrel. Gold fell 0.3% to $1,149.60 per troy ounce.
