UK and European stocks are extending declines in one of the worst opening weeks for the year for stock markets in recent memory. China is at the top of a dizzying list of concerns for markets.
The FTSE 100 has fallen below 5900 with the China-sensitive commodity sector still leading the declines. The German DAX has come just shy of 9800 as concerns over Germany’s declining export advantage to China still driving the losses.
The second triggering of circuit breakers this week in China’s stock markets after a 7% decline in the CSI 300 coupled with another depreciation of China’s currency is weighing on sentiment. A reported unscheduled meeting by Chinese regulators to discuss the country’s stock market could mean the new circuit breaker system is about to be changed or even removed. The circuit breaker system has been criticised because the 7% level appears to be acting as a target for sellers.
Crystallising the concern in markets, legendary hedge fund manager George Soros has said markets are entering a crisis whilst a Chinese fund manager apparently dumped all of his holdings on Thursday calling the situation “insane.”
While shares have been dumped across the board, investors are loading up on havens including gold, which has hit two-month highs and government bonds.
The Fed raising rates while the BOE is signalling inaction for a prolonged period, coupled with uncertainty surrounding a possible British exit from the Eurozone has sent Pound-dollar exchange rate below the 2015 April lows to a fresh 5 ½ year low.
Marks and Spencer shares were one in a very small list of rising shares on the FTSE 100 after a disappointing Christmas sales period promoted the long-time coming exit of Chief Executive Marc Bolland. Food sales were strong, even outpacing fellow upscale grocer Waitrose, but general merchandise sales down 5% was the straw that broke the camel’s back for Mr Bolland’s six year tenure as M&S boss.
US stocks look set for a much weaker open on Thursday following a crash across global markets triggered by another halt in Chinese stocks after less than half-an-hour of trading.
Shares of Apple have led declines in the major stock averages, hitting the lowest since October 2014 on Wednesday. The biggest fear for Apple investors has always been the first annual fall in iPhone sales so reports that the tech giant has cut orders by as much as 30% have sent shares to the lowest in over a year.
Bucking the trend, shares of Netflix were up 10% yesterday after the streaming company opened up for business in no less than 130 new countries in a massive boost to future potential subscriber growth.
USA pre-opening levels
S&P 500: 41 points lower at 1,949
Dow Jones: 346 points lower at 16,560
Nasdaq 100: 110 points lower at 4,333
CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.