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Global Sell Off Continues as Investors Eye China

Global Sell Off Continues as Investors Eye China
Jan 08, 2016 By Simon Herrmann Tags: BHP, STO, WPL, NCM, NST

US Markets Tumble

The US market sharply declined again this week, as continued uncertainty about the Chinese economy, along with mixed US economic data loomed amongst investors’ minds.

The Dow Jones Industrial Average fell 392.41 points, or 2.32%, to 16,514.10 points. Likewise, the S&P 500 lost 47.17 points, or 2.37%, to finish at 1,943.09 points. The pessimism continued there, with the NASDAQ Composite tumbling 146.34 points, or 3.03%, to 4,689.43 points.

The ongoing volatility within the Chinese market, particularly with the state playing a big part in ensuring there is no mass sell offs, has contributed to global investor pessimism. Weak US economic data had contributed to the negative sentiment, with the Unemployment Claims report, a measure of how many are seeking unemployment benefits, was more than forecasted by 6 thousand, to 277 thousand. If the release of key US economic data continues to be inherently negative, this may alter the programme of the US Federal Reserve, who aim to ‘gradually’ hike rates.  

West Texas Intermediate Crude continued to decrease upon the close of the last trading session, falling 0.79 cents, or 2.33%, to $US33.18 a barrel.

Chinese Markets Close Again

Meanwhile in China, the negative sentiment continues in the New Year. The Shanghai Composite fell 236.84 points, or 7.04%, to 3,125 points. Similarly, the CSI 300 lost 245.42 points, or 6.93%, to 3,294.38 points. Under the new ‘circuit breaker’, the Chinese market closed for the day, after the CSI 300 tumbled 7%. The Chinese market is off to a poor start to the year, with the Shanghai Composite losing over 11% for the year.

In Japan, the negative gloom is present, with the Nikkei 225 falling 423.98 points, or 2.33%, to 17,767.34 points.
Whilst in Europe, there is very much the same sentiment. The German DAX fell 234.17, or 2.29%, to 9,979.85 points. Likewise, the London FTSE 100 lost 119.30 points, or 1.96%, to 5,954.08 points.

ASX: Uncertainty Back Home

In Australia, the selloff continued. The ASX/S&P 200 slipped 2.2%, to 5,010.3 points, amongst the continued volatility within the Chinese markets.

Oil mining giants Santos (ASX:STO), along with Woodside Petroleum (ASX:WPL) each lost 7.4% and 5.1% respectively, in response to the dampening in the oil price.

BHP Billiton (ASX:BHP) and Rio Tinto (ASX:RIO) each lost 4.7% at the close of yesterday’s trading.
However, Gold miners Newcrest (ASX:NCM) and Northern Star Resources (ASX:NST) both made gains of 1% and 5.1% respectively, in response to the rise in the gold price to above $US1,110 an  ounce.

 

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Simon Herrmann Author: Simon Herrmann Jan 08, 2016

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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