US markets little changed
The US made some small gains upon the end of overnight trading yesterday, amongst the continued tumble in Chinese markets, along with the continued volatility in Crude Oil prices.
The Dow Jones Industrial Average added 52.12 points, or 0.32%, to 16,398.57. Likewise, the S&P 500 gained 1.64 points, or approximately 0.09%, to 1,923.67 points. However, the NASDAQ continued its slide from last week, losing 5.64 points, or 0.12%, to 4,637.99 points.
Geopolitical tensions, along with the rout in Chinese markets has caused WTI Crude to continue its fall, losing over $US2 dollars, or 6.21%, to $US31.10 a barrel.
The ongoing volatility in both the Chinese economy and its equity markets, is still looming over investors’ minds. Even with the stability of the US labour market, in which they have achieved their target of 5% unemployment, hasn’t been able to increase investor confidence.
Europe sentiment low
Europe is still reeling in the effects of the rout in the Chinese markets. The London FTSE 100 fell 40.61 points, or 0.69%, to 5,871.83. Similarly, the German DAX lost 24.27 points, or 0.25%, to 9,825.07 points. The negative sentiment continued, with the European Stoxx 600 falling 0.3%, to 340.23.
China continues its declines
In Asia, the declines continue. Even with the ‘Circuit Breaker’ no longer in place, the Chinese market still continued to sell off, with the Shanghai Composite falling 169.71 points, or 5.3%, to 3,016.70. Likewise, the CSI 300 tumbled 169.11 points, or 5.03%, to 3,192.45 points. Japan continued to fall as well, with the Nikkei 225 down 69.38 points, or 0.39%, to 17,697.96 points.
The mass sell-off in the Chinese markets started in response to weaker than forecasted manufacturing data. The state tried to ease the sell-off by implementing the ‘Circuit Breaker’, which would close the market for the day if any respective index fell more than 7%. However, it is speculated that it only exacerbated the sell-off in the Chinese markets.
ASX: Resources sector takes a big hit
The ASX continued to stumble for the year, with the ASX/S&P 200 losing 58.6 points, or 1.17%, to 4,932.24 points. The ASX has lost over $100 billion since the start of 2016, as investors have a more bearish outlook for the year ahead.
Iron Ore giants Rio Tinto (ASX:RIO) and BHP Billiton hit 7 and 11 year lows respectively. BHP fell around 4.8%, to $15.55. Likewise, RIO approximately 3.3%, to $40.50. Investors are reeling away from equities that are quite volatile to the conditions within China.
Amongst the continued fall in crude oil prices, oil mining companies like Santos (ASX:STO) and Woodside Petroleum (ASX:WPL) fell to $3.21 and $27.63 respectively.
Author: Simon Herrmann
Jan 12, 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.