China selloff roils global markets
Financial markets are starting 2016 on a bleak note in the aftermath of a selloff in China’s stock markets that halted trading in Shanghai on Monday, Bloomberg reported.
Stocks tumbled worldwide, with global equities heading for the worst opening day of trading in at least three decades.
Emerging markets slid the most since August and the Dow Jones Industrial Average sank more than 300 points, as slowing manufacturing triggered a selloff in China.
Iowa-based publicly traded companies’ stock values took a tumble as well. The Iowa Index, an unweighted average price of 22 Iowa-based public companies tracked by the Business Record, was down nearly 3.2 percent as of 11:02 a.m.
Adding to the turmoil, Saudi Arabia and Bahrain cut ties with Iran, sending Gulf stocks lower and pushing Brent crude higher. Bonds jumped and the yen rallied on demand for haven assets.
“We’ve had a number of negatives out there in the U.S. throughout most of last year as investors battled to have a flat year and China is a reminder that there aren’t many things too bullish about going into this year,” said Michael O’Rourke, chief market strategist at JonesTrading Institutional Services LLC in Greenwich, Conn.
Gauges of volatility in the U.S. and Europe spiked, with the Chicago Board Options Volatility Index surging 24 percent. Its counterpart for the Europe Stoxx 50 jumped 21 percent.
The MSCI All-Country World Index fell 2.2 percent by 9:42 a.m. in New York, topping its previous slide of 1.5 percent at the beginning of 2001. The Standard & Poor’s 500 Index plunged 1.8 percent, after the gauge ended 2015 down 0.7 percent.
The S&P 500’s decline has it on track for the fourth-worst start to a year in data compiled by Bloomberg going back to 1927. In the three worst instances, the index averaged a full-year loss of 0.7 percent, though S&P Dow Jones Indices data indicate the first day of trading has no predictive power for the rest of the year.
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