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Global Stocks Crumble  on First Trading Day
World Economy

Global Stocks Crumble on First Trading Day

Stocks slumped, led by a rout in China’s equities that triggered a market-wide halt, and higher-yielding currencies tumbled as concern about the global economy and Middle East tension saw investors shun risk on the first full trading day of 2016.
China’s CSI 300 Index of equities fell 7%, setting off a circuit-breaker that suspended trade for the rest of the day. The Stoxx Europe 600 Index dropped 2.6% as US index futures sank. Haven assets from gold to treasuries advanced, with the yen touching the strongest level since October, while New Zealand’s dollar led currency losses after a private Chinese factory gauge unexpectedly fell. West Texas Intermediate crude rose 0.8% as Saudi Arabia and Iran tensions rise, Bloomberg reported.
Stocks crumbled around the world, with emerging markets falling the most since August, as slowing manufacturing triggered a selloff that halted equity trading in Shanghai.
“We were starting to see signs that the economic slowdown in China had run its course, so today’s report was a disappointment," said Masayuki Otani, Tokyo-based chief market strategist at Securities Japan Inc. “The Saudi Arabia and Iran issue might be good for oil, but the increase in geopolitical risk means it’s an overall negative for the financial markets."
A reading on European manufacturing is due Monday after the Caixin factory index for China came in at 48.2 in December, missing estimates for a reading of 48.9. On Jan. 1, China’s first official economic report of 2016 signaled manufacturing weakened for a fifth month, the longest such streak since 2009.
Stocks
Trading of Chinese equities stopped from about 1:34 p.m. local time after a selloff triggered a mechanism designed to limit swings in one of the world’s most volatile stock markets. The halt came on the first day the circuit breakers took effect.
The Hang Seng China Enterprises Index in Hong Kong fell 3.6%, while the Hang Seng Index lost 2.7%. Japan’s Topix index slid 2.4%.
All of the Stoxx 600’s industry groups declined in London early Monday, after the gauge posted its worst December since 2002. The measure still beat an index of global equities in 2015.
Standard & Poor’s 500 Index futures fell 1.6%, reversing an earlier advance. US stocks dropped on the final trading day of 2015, with the S&P 500 losing 0.9% to cap a 0.7% annual retreat.
Investors in the world’s biggest equity market will return from the New Year holiday to a swath of data this week, including the monthly jobs report and minutes from the Federal Reserve meeting that ended with the first rate increase since 2006.
Commodities, Currencies
WTI gained as much as 3.5% on Monday, after a 1.2% advance on the final trading day of 2015.
Spot gold jumped 0.9% to $1,071.05 an ounce. Base metals fell, with nickel sliding 3% and copper dropping 2.2% in London.
The yen touched 118.85 per dollar, the strongest level since Oct. 16, as investors sought haven assets. Australia’s dollar slid to 72.12 US cents, down 1.2% from Dec. 31, while New Zealand’s currency was also 1% weaker since then at 67.63 US cents.
The won traded at 1,187.63 per dollar, the weakest level since Dec. 18. South Korea’s exports dropped more than expected in December, posting a 12th monthly decline, figures showed on Monday.
The Bloomberg Dollar Spot Index, which tracks the greenback against its 10 most-traded peers, slipped 0.4%. The gauge climbed 9% in 2015, a third straight gain. The yen had a record fourth annual decline, while the euro slumped a second year, as stimulus in Japan and the eurozone widened the gap between monetary policy in those regions and the US.
The offshore yuan declined the most since August after the manufacturing report spurred speculation the central bank will guide the currency lower to help the economy. The spot rate in Hong Kong’s free market fell 0.7% to 6.62 a dollar, according to data compiled by Bloomberg. The currency in Shanghai, which is allowed to diverge from a central bank fixing by a maximum 2%, touched the weakest since May 2011.
Treasuries gained as the rout in Chinese shares enhanced the allure of the safety offered by the world’s deepest bond market. Benchmark 10-year notes headed for their strongest one-day advance since Dec. 17, driving yields down by 4 basis points to 2.23%.

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