Stocks slump the most in 3 months on new China worries

NEW YORK (AP) – U.S. stocks are opening lower as investors fret about signs of belligerence in North Korea and more weakening of China’s economy.

Stocks across the world fell for a fifth consecutive day on Wednesday as China fuelled fears about its economy by allowing the yuan to weaken further and a nuclear test by North Korea added to a growing list of geopolitical worries. The benchmark index in Shanghai gained 2 percent after a 7-percent plunge on Thursday that led to an early halt in trading. A report in the Shanghai Securities News said the government would keep in place rules preventing shareholders who own more than 5 percent of a company from selling off their stakes until new rules come into effect. “All that matters for markets right now is ‘China can’t get their act straight”‘. Chinese stocks nosedived on Thursday, triggering the second daylong trading halt of…

The mechanism, which was implemented at the beginning of the year, has been triggered twice this week.

Weston added, “The various Chinese ETFs (FXI and ASHR) are hardly suggestive of strong gains in Chinese stocks today, but you can never tell with China and these measures can’t be seen as a positive”. Industrial stocks fell, and aerospace company Boeing lost $3.31, or 2.4 percent, to $135.52 and railroad operator Union Pacific shed 76 cents, or 1 percent, to $74.07. The Nasdaq has fallen six days straight. At one point the S&P 500 hit its lowest level in two months. The Standard & Poor’s 500 index lost 26.45 points, or 1.3 percent, to 1,990.26, for its fourth loss in five days. The German DAX 30 fell 3.7%, the French CAC 40 was down 3.1%, Spain’s Ibex fell 2.9% and Italy’s FTSE MIB dropped 2.5%.

The local currency ended at 1,198.1 won against the greenback, up 2.5 won from the previous session’s close.

European markets also dropped. If oil closes at that level it will be the lowest since February 2004.

In U.S. trade, the West Texas Intermediate (WTI) crude was down 79 cents, or 2.15 percent, at $35.97 a barrel. Brent crude, a benchmark for worldwide oils, fell $2.08, or 4.6 percent, to $34.34 a barrel in London.

It also revealed like-for-like sales in its general merchandise arm, which includes clothing, slumped by 5.8% in the 13 weeks to December 26. Late Monday the company said it will receive a sped-up review of a new hepatitis C treatment, and on Tuesday Gilead reported positive results from a clinical trial of a hepatitis B drug.

China’s share market is increasingly being perceived as a barometer for the country’s economy although some market observers say it shouldn’t be. Those worries about China have drowned out signs that the economies of the United States and Europe are doing fairly well. The People’s Bank of China let the yuan slip further overnight, sparking a sell-off in emerging market currencies.

IG market strategist Evan Lucas said the Chinese market suspension and recent data showing more weakness in the Chinese manufacturing and services sectors had investors questioning how much pressure the economy is under.

Hong Kong’s Hang Seng rose 0.6 percent and South Korea’s Kospi added 0.7 percent. Natural gas declined 5.6 cents, or 2.5 percent, to $2.267 per 1,000 cubic feet.

The price of copper fell 2.6 percent, however. Marathon Oil declined $1.25, or 9.8 percent, to $11.51 and Murphy Oil shed $2.27, or 10.1 percent, to $20.32.

The euro edged up to $1.0788 from $1.0744. The dollar fell to 117.92 yen from 118.38 yen late Thursday.

Apple fell 2.0 percent following reports that it is scaling back production of its iPhones.