Global Stocks Pummeled on China Volatility

Following-up from earlier, "China Halts Trading After Stocks Drop 7 Percent in 29 Minutes."

Now, at the Wall Street Journal, "Global Stocks Tumble on China Volatility":

Steep falls in Chinese equities pummeled global markets on Thursday, as widening concerns over the world’s No. 2 economy pushed investors out of shares, oil and metals.

The selloff came after the People’s Bank of China made its largest downward adjustment to the yuan since August, a move that sent the country’s stock market down over 7% amid concerns about capital flight from the Asian giant.

“A very large connected economy is a hard bullet to dodge for all equity markets,” said Nicholas Melhuish, head of global equities at Amundi Asset Management.

China’s stock markets stopped trading after only 30 minutes, ending the shortest trading day in their history after a newly installed mechanism to limit volatility was triggered for the second time this week.

Pessimism spread quickly, with Japan’s Nikkei Stock Average, Australia’s S&P/ASX 200 and Hong Kong’s Hang Seng Index each losing over 2%.

European stocks opened to steep losses. The Stoxx Europe 600 was down 3.4% in midmorning as energy and basic resources shares tumbled.

Futures pointed to a 2.5% loss for the S&P 500. Changes in futures markets don’t necessarily reflect moves after the opening bell.

Fears about China spread to commodity markets, sending Brent crude oil down 2.3% to $33.42 a barrel, nudging higher after sharper earlier falls amid concerns about future demand from the world’s second-largest consumer of crude. Metals were also down, with copper falling 2.5%.

As the price of resources tumbled, commodity-linked emerging markets all took a hit. South Africa’s rand currency fell to an all-time low against the dollar, falling to 16.22 to the dollar.

In Europe, China-exposed mining and energy sectors were leading the losses, with the sectors down 5.2% and 4.2% on the day respectively as oil prices lingered near multiyear lows.

Shares in Anglo American PLC were down 9.3%, Tullow Oil PLC was down 5.6% and Glencore PLC was down 4.3%.

The first week of trading of the year has been dominated by China, after markets opened on Monday to a weaker yuan and lackluster Chinese data manufacturing data.

As investors flee more risky assets, so-called safe-haven investments have gained...

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