Dec 9, 2014 4:50 AM
China shares plunge, other global markets falter
The Associated Press
BEIJING (AP) Chinese stocks plunged Tuesday, snapping a months-long boom, and other global markets were lower on concern about feeble Chinese trade and Japan's recession.
KEEPING SCORE: France's CAC-40 fell 1 percent to 4,330.61 and Germany's DAX lost 0.8 percent to 9,934.17. Britain's FTSE 100 shed 1 percent to 6,603.34. Wall Street looked set for further declines. Futures for the Dow Jones industrial average and Standard & Poor's 500 both fell 0.3 percent. On Monday, the Dow fell 0.6 percent, the S&P lost 0.7 percent and the Nasdaq composite dropped 0.8 percent.
CHINESE MARKETS: Major Chinese oil and bank stocks fell, some by the daily limit of 10 percent allowed by regulators, as the market took a break from a buying frenzy that has pushed up the Shanghai benchmark by 41 percent since June. Investors had been driven by hopes for an economic rebound combined with outright cheerleading by the state press. But prices fell Tuesday after China's clearing house for securities trades raised the minimum rating for corporate bonds it would accept in exchange for short-term credit, prompting concern about the availability of financing for trades.
THE QUOTE: Hu Guopeng, an analyst at Founder Securities in Beijing, said the plunge in China's stock markets was a "technical correction" linked to the uncertainty about credit availability created by the change in collateral requirements. It "does not mean the end of the market boom," Hu said.
ASIAN SCORECARD: The Shanghai Composite Index dived 5.4 percent to 2,856.27 though it still was up 6.6 percent over the past week following a months-long rally. China's four major state-owned banks all dropped by at least 9 percent and Sinopec Ltd., Asia's biggest refiner by volume, fell 8.2 percent. China Life Insurance Ltd. fell 10 percent. Hong Kong's Hang Seng dropped 2.3 percent to 23,485.83 and Tokyo's Nikkei 225 fell 0.7 percent to 17,813.38. Seoul, Sydney and Bangkok also declined. Singapore and New Zealand were the only gainers.
GRIM DATA: Customs data Monday showed China's November export growth was weaker than forecast and imports unexpectedly contracted. That suggested economic growth might be cooling further after hitting a five-year low in the latest quarter. Forecasters say a boost to growth from a surprise interest rate cut in November might not show up until as late as the second quarter of next year. For Japan, revised figures for the July-September quarter showed its economy shrank 1.9 percent, a bigger drop than previously estimated.
ENERGY: U.S. benchmark crude was up 23 cents to $63.30 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged by $2.79 on Monday to close at $63.05. Brent crude, used to price international oils, was up 30 cents at $66.49 a barrel.
CURRENCIES: The dollar declined to 120.03 yen from Monday's 120.87 yen. The euro rose to $1.2351 from $1.2307.