China stocks swing in volatile trade as circuit breaker scrapped

The decision came hours after CSRC officials held an emergency meeting to discuss conditions on the nation’s tumbling stock market, according to a person familiar with the discussions who asked not to be named because he wasn’t authorized to speak publicly. “Or if the government itself knows or is capable of implementing the policy even if there is one”, DBS said in a currency note Friday.

Earlier in the day the Dow was down more than 300 points.

Earlier Thursday, trading on China’s Shanghai and Shenzen stock markets were pre-emptively halted for a second time this week after new “circuit breakers” were triggered when a benchmark stock index fell seven per cent.

Shares in China have rallied after the country suspended a stock market “circuit breaker” mechanism which had been created to halt volatility but appeared to backfire. But it didn’t reach the initial expectations of maintaining market stability. The Shenzhen Composite Index for China’s second smaller stock exchange slumped 8.3 per cent to 1,955.88.

The Shanghai Composite Index tumbled 7.3 per cent to 3,115.89 bef-ore “circuit breakers” suspended trading for the day.

Investors, however, remain concerned that China is struggling to keep control of the yuan.

“People now don’t have that same deadline to sell…but China’s stock market is going to go where it’s going to go”, said Boockvar.

The ChiNext Index, China’s NASDAQ-style board of growth enterprises, gained 0.73 percent to end at 2,273.02 points.

On Thursday, the yuan’s exchange rate was set at its lowest level since 2011, sparking fears further declines might lead to a capital outflow.

In the U.S., the Dow Jones industrial average sank 2.3% and the Standard & Poor’s 500 lost 2.4% on Thursday. To make matters worse, he said, the markets don’t have many facts to go on.

In other commodity news, March copper shed seven cents to US$2.02 a pound and the February contract for natural gas rose 11.5 cents to US$2.382 per mmBtu. The CSI300, considered the Chinese benchmark index, fell 7% for the day.

“There is a wall of worry under full construction, brought on by China, fall in oil prices and uncertainty regarding quarterly earnings“, Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis told Reuters.

Adding to the gloom, oil slid below $33 a barrel to near 12-year lows before regaining some ground.