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Some recovery in global stocks on China adjustment
January 5, 2016, 4:49 pm

Although European and some Asian stocks rallied on China's regulatory adjustments Tuesday, US stocks appeared "wobbly" [Xinhua]

Although European and some Asian stocks rallied on China’s regulatory adjustments Tuesday, US stocks appeared “wobbly” [Xinhua]


European stocks recovered most of their losses from a day earlier after Chinese regulators announced they would increase intervention mechanisms to prevent the type of sell-off that plunged global markets into a tailspin last summer.

The China Securities Regulatory Commission (CSRC) said it would use a circuit breaker mechanism, which will be constantly enhanced, and added that the market needs time to adapt.

The circuit breaker currently halts trading for 15 minutes when the Shanghai and Shenzen composites together (known as CSI 300) fall five per cent.

If the decline reaches seven per cent trading is halted throughout all of China’s exchanges.

The announcement came as the People’s Bank of China (PBoC) injected 130 billion yuan ($20 billion) at the opening of trade on Tuesday.

While the dual moves helped significantly slow the sell-off rate from Monday, the benchmark Shanghai Composite was still in the red closing 0.26 per cent on Tuesday.

Hong Kong’s Hang Seng Index closed down 0.65 per cent; the Shenzen composite fell 1.86 per cent.

Some Asian stocks such as South Korea’s KOSPI rallied on the Chinese adjustment, closing up 0.61 per cent.

But Australia’s ASX, which had a day earlier been the best performer in the region, fell by 1.62 per cent.

India’s benchmark Sensex closed down 0.17 per cent while Japan’s Nikkei was down 0.42 per cent.

The scenario was far brighter in Europe.

France’s CAC40 was up 0.15 per cent; London’s FTSE closed 0.55 per cent in the black, while Germany’s DAX recovered from a major sell-off on Monday to close up 0.03 per cent.

It was a mixed bag in the US, however, as fears of an oil glut continued.

US benchmark West Texas Intermediate crude fell 1.2 per cent, to $36.32 a barrel in New York. International benchmark Brent crude dropped 2 per cent, to $36.46 a barrel in London.

At press time (12pm EST), the S&P 500 slid out of negative territory to rise 0.015 per cent while the Nasdaq Composite lost some early gains to fall into the red down 0.13 per cent.

The Dow Jones Industrial average was down 0.26 per cent.

The BRICS Post with inputs from Agencies