Stocks sink around the world on first trading day of 2016

The Dow Jones Industrial Average sank more than 375 points as a selloff in Chinese equities spread around the world, fanned by concerns that economic growth is decelerating from Asia to North America.

On the whole, technology was one of the weakest among the 10 sectors in the S&P 500 index. Trading in China was stopped prematurely after circuit breakers were triggered during their first day they were implemented. Bonds jumped and the yen rallied on demand for haven assets. “As we are all too familiar with, uncertainty is quite bad for the financial markets”, said Bernard Aw, market strategist at IG in Singapore.

The lead from Wall Street is soft as stocks saw substantial weakness on Monday, joining in the global sell-off as stocks fell sharply amid renewed concerns about the world’s economy. The violence follows Saudi Arabia’s execution of a prominent Shiite cleric.

Emerging markets were especially hard-hit by the China data, with MSCI’s index tumbling 3.4 per cent, while its all-country world stock index fell 2.47 per cent. The S&P 500 fell 31.28 points, or 1.53 per cent, to 2,012.66 and the Nasdaq Composite lost 104.32 points, or 2.08 per cent, to 4,903.09.

It took no time at all for fears about China’s economic slowdown and market gyrations there to put USA investors in a bad mood this year.

Tesla was down 7.9 percent at $221.03. The Commerce Department announced Monday that construction spending during November 2015 was estimated at a seasonally adjusted annual rate of 1,122.5 billion US dollars, 0.4 percent below the revised October estimate. China’s credit growth – including loans plus other forms of financing – will ease to 13 percent in 2016 from about 14 percent previous year as the economy slows and bad loans encourage caution, according to an estimate from Fitch Ratings.

Escalating tensions in the Middle East briefly sent the price of oil higher.

China has been the powerhouse of the global economy with a huge appetite for everything from metals used in factories to cars purchased by increasingly affluent Chinese. The Volatility Index (VIX.X), otherwise known as the “fear index,”‘ spiked 16% to 21.17. Its counterpart for the Europe Stoxx 50 jumped 22 percent.

Indeed, that August episode likely planted the seeds of the latest slide since authorities reacted back then by imposing a lock-up on share sales by major institutional investors. While the German DAX Index plummeted by 4.3%, the French CAC 40 Index and the UK’s FTSE 100 Index slumped by 2.5% and 2.4%, respectively.

At the open on Tuesday, Shanghai stocks initially plunged more than 3 percent in what dealers described as panic selling. I expect 2 percent growth for the next year, but we should be at 4 percent.

Negative sentiment was also generated by the release of disappointing United States data, including a report from the Institute for Supply Management showing a continued contraction in manufacturing activity.

Brent crude fell 0.3 percent, erasing gains of more than 2 percent after Saudi Arabia and some of its Gulf allies severed or downgraded ties with Iran in the biggest meltdown in relations between the Middle Eastern powers in nearly three decades, raising the specter of deepening conflicts across the volatile region.