January 4, 2016
(ANTIMEDIA) Markets around the world experienced a panicked free-fall for the opening of 2016, as China’s new “circuit breaker” halted trading altogether after its Shanghai and Shenzhen stock exchanges lost a whopping 7%. In the U.S., the Dow Jones Industrial Average traded down 350 points, or 2% — on pace for becoming the worst first day of new year trading since 1932 — while both the Nasdaq and the S&P 500 experienced similar losses before righting slightly.
We're revolutionizing the news industry, but we need your help! Click here to get started.
“For the Dow, the plunge, should it hold through the close, is the worst start to a year since 1932, according to Dow Jones data,” MarketWatch reported. “It would also be only the fourth time that the blue-chips gauge has fallen by at least 2.5% on the first trading day of the year, with 1904, 1922, and the aforementioned 1932 representing the other periods.” As for the Nasdaq and S&P, “the slide is on track to be the worst day of trade since Jan. 2, 2001, when S&P 500 collapsed 2.8% and the Nasdaq plunged more than 7%.”
Concerns over the worldwide economic slowdown, as well as escalating tensions in the Middle East helped to drive markets lower around the globe. Saudi Arabia cut diplomatic ties with Iran over the weekend due to an attack on its empty embassy building after the kingdom executed a prominent cleric.
Though the Chinese circuit breaker functioned as planned by preventing a much larger crash, a number of market analysts suspect it may have worsened the problem. As CNBC reported, “First, the new system-wide circuit breakers take effect when there is a 5 percent decline in the market (the benchmark CSI 300), which creates a 15-minute halt. If the market drops 7 percent, the market closes for the day.” Manufacturing figures hitting below expectations and an upcoming removal of a previous ban on insider trading are certainly factors, but “the very existence of the circuit breakers” shouldn’t be dismissed as “a factor in the drop.
“This was the first day circuit breakers came into existence, and given the speed at which we went from down 5 percent to down 7 percent (about two minutes) general worry that the market would close before the end of the day — which is what happened — may have been a very real factor.”
Though trading continues for the day, if markets around the world are any indication, “it’s not likely to end well for U.S. stocks.”
This article (Global Stock Markets Take a Terrifying Turn on the First Day of Trading of the Year) is free and open source. You have permission to republish this article under a Creative Commons license with attribution to Claire Bernish and theAntiMedia.org. Image credit: Rafael Matsunaga Anti-Media Radio airs weeknights at 11pm Eastern/8pm Pacific. If you spot a typo, email email@example.com.