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Spreadex Market Update

Thursday, January 07, 2016 - Evening Market Update
Connor Campbell - Market Analyst at Spreadex

China suspends circuit breaker rule, (briefly) calms still calamitous global indices

It seems that investors, for now at least, are taking the news as a positive, the move ostensibly preventing the panic-pause-more panic pattern that appeared in the Chinese markets on Monday and Thursday from repeating itself. That’s the theory, at least; we’ll just have to see how it works in practice tomorrow morning, as whilst the exacerbating nature of the circuit breaker rule may have been removed, the fear-inspiring issues currently scaring the bejesus out of investors remain unsolved.

Initially opening at a 2% decline (hitting a 3 month low in the process) the Dow Jones crawled back to a more reasonable, if still woeful, 1.3% loss as reports came out about the China Securities Regulatory Commission’s decision. The Eurozone also saw its indices recover from their intraday lows in the aftermath of the news, the DAX calming to a mere (!!!) 2.7% loss from its earlier 300 points-plus plunge, with the CAC still down by around 2%.

The FTSE, like its global peers, sort of pulled back from the brink as Thursday continued, if not undergoing as drastic a loss-reduction as those instruments found in the Eurozone and US. The UK index is still under duress, however, its oil and mining stocks awash with the blood of Brent Crude’s, admittedly reduced, decline.

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