Stock market turmoil: Wall Street sheds 2.4%, FTSE 100 loses £30bn - as it happened
Markets slide around the globe after Chinese regulators are forced to halt trading for the second time this week
- Dow suffers worst start to a year ever
- Market close: FTSE 100 loses 30bn
- China scraps circuit-breaker
- Chinese market suspended after 7% plunge
- Soros fears repeat of 2008
10.57pm GMT
And finally, here are a few photos from Wall Street as traders digest the news that this has been the worst start to a new year in the Dow's history.
Reuters' Brendan Mcdermid has really captured the mood:
10.50pm GMT
Confirmation that this has been a historically bad start to the year:
S&P 500'S 4.9 PCT DROP TO START 2016 MARKS WORST 4-DAY OPENING IN HISTORY
10.15pm GMT
The stock market turmoil makes the front page of Friday's Financial Times, and City AM:
FINANCIAL TIMES: Global markets in fresh turmoil #tomorrowspaperstoday #bbcpapers pic.twitter.com/rpYzYRE8uN
Friday's @CityAM front page: CHINA SCRAMBLES TO CALM MARKETS pic.twitter.com/hlhWZc5Lqq
10.14pm GMT
Investors on both sides of the Atlantic will head to bed tonight, wondering what drama will occur in China while they sleep.
Bill Gross, the bond-trading expert (ex-Pimco, now Janus Capital), predicts another day of losses on the Shanghai market:
"Based upon the ETF in the United States, China is predicted to be down 5 percent or 6 percent"But China is an artificial market. All global markets are artificially based.
And to the extent that we have a catharsis, I think, depends upon central banks basically giving up in terms of what they do. I don't think that's going to happen."
9.11pm GMT
The VIX 'fear index', which tracks volatility in the market, is up by a fifth today! That shows US investors are pretty worried right now.
US Closing Prices: #DOW 16514.1 -2.32% #SPX 1943.09 -2.37% #NDX 4305.72 -3.11% #VIX 24.91 +20.98%
9.10pm GMT
The Canadian stock market has also suffered a dose of the China blues.
Toronto is now 20% below its record high in September 2014, dragged down by weakening natural resource stocks as emerging markets have hit trouble.
BOOOOOOM. Canada officially enters a bear market. pic.twitter.com/Mx5mIOHL9l
9.08pm GMT
Hello again. Wall Street has just closed for the night, and like Europe, the losses are pretty dramatic.
The S&P 500 - the broader measure of American stocks - shed over 2.3% by the end of trading.
Nasdaq in correction on China worries https://t.co/QLcODGggww pic.twitter.com/iJUjoFyvWK
The first 4 days of 2016 are officially the worst first 4 days of any year ever for the Dow; the index is down 5% so far in 2016.
5.18pm GMT
Finally, Europe's stock markets have closed after a volatile day's trading dominated by China.
Despite a late recovery, the FTSE 100 has finished the day down 119 points, or 1.96%, at 5954. That's a three-week low, which wipes around 30bn off the blue-chip index.
1991, 2000, 2008, 2015 & 2016. The five worst opening 4 days on record for the FTSE 100. pic.twitter.com/uCck5zeVT0
Suspension of trading in Chinese stocks - the second time in a week - is once again being eyed as the key driver behind the downside pressures after more Yuan devaluation hit local equities hard, although overtures from George Osborne that we should be bracing ourselves for interest rate hikes here in the UK are adding an extra layer of gloom to the equation.
In London, mining stocks are once again suffering the most with what looks like an imminent hard landing for the economy in China - and one that arguably can't be avoided with government intervention - whilst Aberdeen Asset Management (-7.7%) is also struggling against the fact assets under management will we suffering in the wake of this Chinese downturn.
4.33pm GMT
The Economist have a corker of a story - Saudi Arabia is considering floating its state oil firm, Aramco.
That's according to the kingdom's deputy crown prince, Muhammad bin Salman, who also spoke about his plans to shake up its economy. A "Thatcherite revolution", no less.
"I believe it is in the interest of the Saudi market, and it is in the interest of Aramco."
Saudia Aramco "is almost certainly the most valuable company in the world" -- @JKempEnergy
EXCLUSIVE: A decision will be taken in months on whether Saudi Aramco will be listed https://t.co/8EeOIKmbaY pic.twitter.com/TI6GZ39XaW
"Asked if Saudi Arabia was undergoing a "Thatcherite revolution", Prince Muhammad replied: "Most certainly."" https://t.co/nNWawDsMQ0
3.55pm GMT
Away from the turmoil in the global economy, there is bad news for workers at a long-standing Scottish knitwear company.
Hawick Knitwear has a manufacturing heritage dating back to 1874 and administrators say they hope a buyer can be found.
The company's finances have suffered from increasing production costs and reducing margins, while attempts to secure new investment have been unsuccessful.
"It is a massive shock to lose such a well-respected and big name as Hawick Knitwear."
3.17pm GMT
Spreadex's Connor Campbell confirms that Beijing's u-turn has brought some relief to the City.
However, we don't yet know how investors in China will react....
Whilst still pretty dire, the global indices appear to have been (briefly) calmed this afternoon by news that China will be suspending the stock market circuit breaker rule that has wreaked such havoc this week.
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.
3.13pm GMT
Four members of the FTSE 100 have now scrambled into positive territory, as the London market recovers some of its earlier losses:
No longer a Billy no mates! A couple of stocks join Randgold Resources in positive territory #ChinaMeltdown #FTSE pic.twitter.com/0vAl0b8Pib
3.08pm GMT
In another surprise twist, Denmark's central bank just raised interest rates - at least for commercial banks.
The move means that Danish commercial banks will only face a negative rate of -0.65% on money left at the central bank, up from -0.75%.
Danish central bank hikes deposit rate from -0.75% to -0.65%; follows intervention in market (buying of DKK), Lending rate on hold at 0.05%.
3.01pm GMT
China's decision to suspend its ill-fated circuit breaker system has been welcomed by the markets.
In London, the FTSE 100 is clawing back some losses. It's now down "just" 121 points, or 2%, at 5957. That still wipes out 30bn of value, and puts the FTSE 100 at a three-week low.
That might finally give Chinese stocks room to breathe; 5% CB = too tight, almost guaranteeing 7% limit is hit and markets closed
2.50pm GMT
More reaction:
#China suspends circuit breaker system. It would be naive to think this is the main cause of volatility, but it hardly helped.
2.48pm GMT
China suspends circuit breakers because..... they are making things worse
China has triggered the circuit-breaker on its circuit-breaker it seems...
2.48pm GMT
Here's a reminder of how the Chinese circuit breaker kicked into action today, triggering the shortest trading session ever (just 29 minutes!)
2.43pm GMT
Breaking news from China... the stock market regulator has apparently announced that it WILL suspend its stock market breaker rule.
DEVELOPING: China suspends stock circuit breaker rule, CSRC says on Weibo https://t.co/eJqFL6wsuh
2.37pm GMT
Ouch. The Dow Jones industrial average has shed almost 300 points, or 1.7%.
Every share is in the red:
Dow off >300 points after open on #China angst. pic.twitter.com/4tLcoaqgAN
2.33pm GMT
Hold onto your tin hats, folks.
2.23pm GMT
Commodity prices are hitting new five-year lows, thanks to economic growth fears and the stronger dollar.
Palladium is down 5% at $482 per ounce, its lowest level since August 2010. Zinc has hit a six-year low, and copper is also down.
*ZINC FALLS TO LOWEST LEVEL SINCE JULY 2009
2.18pm GMT
Could Beijing authorities ditch their circuit-breaker rule, following this week's turmoil?
Rumours circulating that Chinese stock regulator may scrap circuit breaker less than a week after its introduction... #CSI300 RO
Less than half an hour. That's how long China's stock markets were open... https://t.co/1PKQJ7KPB8 pic.twitter.com/NUaMbjPZJd
2.02pm GMT
Britain's FTSE 100 is currently down 2.5%, or 152 points -- on track to hit a three-week low.
If it falls much further, it would threaten the lows of last August, the last time China triggered a stock market rout:
1.49pm GMT
The US stock market is on track to hit a new three-month low, when trading begins in 40 minutes time:
1.39pm GMT
The China crisis is partly caused by Beijing's policy of pegging its currency against the US dollar, argues economist Sean Richards.
A deeper analysis of the Chinese situation shows us that its own financial instabilities have been exacerbated by the strong US Dollar.
This has been made worse by its decision to set its exchange-rate against it. Thus rather than drifting lower like virtually everyone else instead the pressure builds up, which it has tried to resist, but even with its sizeable currency reserves it has to give way every now and then. This then adds to the pressure as everybody concentrates on the decline in the reserves rather than the large amount left.
In trade-weighted terms the Yuan is not devaluing according to China https://t.co/yZXkA4OOpN #CurrencyWars #PBOC #ChinaMeltdown
1.26pm GMT
Got it in one...
Insight: "The fact that the stock market has collapsed twice in four days signals there's a lack of confidence." https://t.co/jAbuqljKMC
1.23pm GMT
China's international competitors will fear that Beijing is triggering a currency war, by allowing the yuan to hit a five-year low against the US dollar today.
Andy Yu, senior economist at MNI Indicators, says other emerging market currencies will probably also weaken in response (reminder, they've already weakened this year).
"A weaker yuan is a concern for emerging markets that compete directly with China in exports. The immediate upshot is that currencies in countries including South Korea, Thailand, the Philippines and Taiwan will continue to adjust downwards in response to yuan moves.
On current evidence the risk of a full blown emerging markets crisis looks less likely with emerging economies having built up larger foreign exchange reserves and put in place far better external debt management. Still the situation bears close scrutiny and alongside continued Fed tightening this year will put pressure on emerging markets' currencies over 2016."
12.56pm GMT
It's a bad day for stock market bulls.....
12.50pm GMT
The Economist reckons China could trigger a repeat of the 1998 Asian crisis, rather than the 2008 vintage which George Soros fears.
Here's its logic:
If China devalues, then other Asian nations will come under pressure to follow suit, for fear of losing competitive position. That will trigger worries about those Asian companies that have borrowed in dollars. there could be banking issues in Asia.
This is a potentially worrying scenario. Whether 2008 is the right parallel is another matter. If the bearish case does come true, then it sounds more like 1998 when a round of Asian devaluations was triggered by the realisation that growth had been fuelled by speculation. Western economies did manage to overcome that crisis. The real worry is that emerging countries are a lot more important for the global economy than they were back then.
12.46pm GMT
Investor-turned-philanthropist George Soros has contributed to the gloom today, by claiming that we could face a repeat of the turmoil we experienced in 2008.
"China has a major adjustment problem. I would say it amounts to a crisis.
When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008."
12.15pm GMT
Some Chinese companies could be forced into default if Beijing continues to devalue the yuan.
So argues Danae Kyriakopoulou, senior economist at the Centre for Economics and Business Research. She warns:
Many Chinese corporates have taken on a lot of debt, some of it dollar-denominated. This exposure creates an important risk as the People's Bank of China PBOC continues to allow the yuan to weaken.
It is not far-fetched at this stage to draw comparisons with the Asian currency crises of 1998 that occurred as economies with high levels of dollar-denominated debts were forced to devalue. This, together with the commitment by the Chinese leadership to give market forces a greater say may mean that we will see many more corporate defaults in China this year.
12.08pm GMT
FTSE 100 down a stunning 40bn, China crisis, Brent crude at 11 year low (yet petrol prices not moving) Hold onto your hats
11.49am GMT
What. A. Morning.
Nearly four hours after trading began, the FTSE 100 is still deep in the red as the latest crash in China spooks markets around the globe.
UK and European stocks are extending declines in one of the worst opening weeks for the year for stock markets in recent memory. China is at the top of a dizzying list of concerns for markets.
There have been painfully few chinks of light this morning, the markets covered in an almost impenetrable cloud of bearish fog.
11.19am GMT
There are anxious faces on the Frankfurt stock market, as traders watched shares slide.
The DAX index fell by over 3% this morning, dropping through the 10,000 point mark for the first time since October.
11.00am GMT
Wall Street is expected to join the selloff when trading begins in three and a half-hours.
The futures market suggest the Dow Jones industrial average will tumble by 2.5%, while the Nasdaq is heading for a 3.3% plunge.
10.49am GMT
The pound appears to be suffering from the uncertainty over Britain's membership of the EU.
Andy Scott, economist at currency firm HiFX, reckons Brexit risks are compounding the impact of the China crisis on the UK currency.
Sterling's decline against a rising US Dollar has been accelerated by the risk-off mode this week that has investors seeking refuge in safe haven currencies including the US Dollar, Japanese Yen and the Swiss Franc. That can almost entirely be attributed to the Chinese central bank allowing its currency to weaken to its lowest level against the dollar in almost five years, fuelling speculation that the economy is slowing faster than official figures suggest.
"Concerns over a Brexit and reduced bets that the Bank of England will hike rates any time soon have also weighed on Sterling.
10.38am GMT
Veteran analyst David Buik, who has seen a few crashes in his time, says there is an "acrid stench of fear" in the City and Canary Wharf.
He adds:
The start to the year has been metaphorical carnage as far as equities are concerned. China has set the agenda with two gargantuan falls this year, aided and abetted by oil falling to its lowest level in 12 years (-4% today) suggesting that investors are not happy campers!
10.21am GMT
Panda bear market, anyone?
China in a tiff again https://t.co/MxYoC9RoYK pic.twitter.com/Dtty23BOP7
10.17am GMT
We have a glimmer of good news - Europe's unemployment crisis has eased a little.
The eurozone's jobless rate dipped to 10.5% in November 2011, according to eurostat, which is the lowest since October 2011.
Lowest unemployment rate in euro area since Oct 2011, in EU since July 2009 #Eurostat https://t.co/KbJTORze3S pic.twitter.com/4lMTkMBELq
10.11am GMT
China isn't the only developing economy to make a bad start to 2016.
A swath of emerging market currencies have weakened since the start of the year, as investors fear that their economies will falter.
Happy New Year for Emerging Currencies. Not. pic.twitter.com/bCoFbf2b4N
10.07am GMT
Greece's stock market is sharing the pain:
Athens market sharply down too. General Index -4.7%, FTSE Index -5.6%. #Greece
10.04am GMT
City traders may have now dried off after the early morning deluge, but their mood isn't any sunnier.
Not unlike the weather in London today, it never rains but it pours. While it's said that the darkest hour is often before the dawn, nobody appears brave enough to involve themselves in risk assets this morning.
The drop in oil prices and China's Shanghai Composite once again triggering circuit breakers sees major European indexes under pressure while government bonds strengthen across the board.
Trading in China stopped after 29 minutes amid the Shanghai's Composite tumbled by 7.04%. Forex reserves in China are also lower than what were expected. At the end of December they stood at $3.33 trillion and given that the IMF has recently said that $2.6T is required to maintain the yuan fix, this worse than expected depletion is only bolstering negativity towards the world's second biggest economy.
9.55am GMT
A reminder of what triggered today's rout:
China's markets normally open 9:30am-3pm with a 90-min break. Today trading was suspended after 870 secs; exchanges closed after 29 mins.
9.39am GMT
As if there wasn't already enough to worry about, China has revealed a record drop in its foreign exchange reserves.
New data from the People's Bank of China show that its FX reserves shrank by $107bn in December - the biggest monthly drop on record.
#China | Reserves dropped $108B in Dec ...more than when mkt was last concerned about it last summer pic.twitter.com/EEaI08X0tM
#China FX reserves even lower than expected = $3.33T...burning through $108b in December to prop up #yuan
9.12am GMT
Sterling has just hit its lowest level against the US dollar since the middle of 2010.
The pound has lost half a cent against the greenback today, hitting $1.4561. That's a five and a half-year low, taking us back to the uncertain times after the 2010 general election.
#GBPUSD lowest since June 2010.
GBPUSD at lowest since 2010 but trade weighted GBP 4% off multi-year highs. Further to fall... pic.twitter.com/RMsi0Bx4Fr
9.05am GMT
China's new 'circuit breaker' is meant to avoid market volatility. It clearly doesn't work.
As it stands, if the market falls 5% then trading is suspended for everyone to calm down. It then reopens, allowing investors to recover their nerve.
Some amazing events on the Chinese stock markets overnight with trading halted for the second time in a week, the second time this year after just 870 seconds of trading.....
Clearly the circuit breaker is having the opposite affect to what is intended and is making things worse. It also stops the market having any chance of bouncing. Had it been introduced during 2015, it would have been triggered 20 times.
8.53am GMT
Today's selloff is causing a lot of angst in the City, and sending investors running for cover.
Terry Torrison, managing director at Monaco-based McLaren Securities, says:
"The extent of the slowdown in China is certainly a worry. Investor sentiment is very fragile at the moment."
"It's looking pretty ugly. We've been scaling down equity positions. It's time to take a step back to re-evaluate the situation."
8.45am GMT
The Financial Times has a rather smuttier take on Marc Bolland's time at Marks & Spencer:
Now there's an image. https://t.co/6nZAZ4JI7v pic.twitter.com/olujG5IgoR
Good lord. A little early for this FT comment https://t.co/C9Ao4MGl4U pic.twitter.com/4nq16Ansdd
8.41am GMT
Marks and Spencer is defying the global rout!
Its shares are up 1.5%, making it the only riser on the FTSE 100. The City appears to be applauding the news that Marc Bolland is retiring.
Bolland has been under intense pressure from major shareholders for his failure to grow the business. And when you look at their recent results, its easy to understand why Bolland had to go and the tough job his replacement, Mr Rowe now finds himself in. Somewhat paradoxically, I expect shareholders to react well to the news that Bolland will now depart after months of speculation.
A drop of 5.8% in general merchandise is simply awful and at the bottom of market expectations. Whilst the firm did enjoy what it claimed was its best ever Christmas week for food sales, like for like food sales over the Q3 period grew 0.4%, which is disappointing though shows M&S fared better than some of its competitors. Overall like for like UK sales fell 2.5%.
Related: M&S boss Marc Bolland to step down
8.35am GMT
The Stoxx 600, which tracks the largest 600 companies across Europe, has fallen by 2.2% this morning.
By my reckoning, that's a three-month low:
Only 6 #stocks gaining on European benchmark...594 falling! pic.twitter.com/vaGaFWwIZW
8.32am GMT
European markets are also being hit hard, as fears over China's economy ripple through global bourses.
Germany's DAX is leading the selloff, tumbling by 2.75% or 281 points to 9,932. Every share in Frankfurt is down, as investors fear that the powerhouse Eurozone economy will suffer if China's economy hits serious trouble.
8.07am GMT
The FTSE 100 has tumbled by over 100 points at the start of trading, shedding almost 2% of its value.
The blue-chip index is being dragged down by mining stocks, but every single share is in the red. It's down 114 points, or 1.9%, right now.
Equity markets are continuing their steep losses as we enter the final part of the trading week with investor sentiment being pressured by various different factors.
This includes the resumption of fears over global growth following weak data from China in the beginning of the year, while increased geo-political tensions between Saudi Arabia and Iran and an unexpected nuclear test from North Korea have also encouraged investors to dodge away from riskier assets like stocks. Another threat to investor sentiment is the persistent and continued weakness in the commodity markets, which only today saw the price of oil falling to a fresh 11 year lows of $32.70 for the first time since 2004.
8.00am GMT
Ding ding..... the European stock markets are open. Brace yourselves for a wave of selling.....
7.50am GMT
If you can't sell shares, you may as well crack on with the knitting.....
Chinese stock brokers have the life. 30 minute workdays.
7.46am GMT
Crude oil prices are taking another kicking, tumbling over 5% in early trading.
Brent crude has plunged below $33/barrel for the first time since 2004. It's currently changing hands at just $32.25 per barrel, a new 11-year low.
The rout continues in #crude oil. #WTI $32.10 -5.3% #Brent $32.25 -5.7% RO
7.41am GMT
The Chinese stock market really did suffer a precipitous decline today, triggering the circuit breaker that brought trading to a very early close:
Chart of the day: #China's CSI 300 closed 6.9% lower after on of the shortest trading sessions in history. pic.twitter.com/0dphpf6ZvQ
7.38am GMT
City traders are bracing for a grim start to trading - once they've dried themselves (it's wet today)
Horrible weather in London this morning and likely to see a horrible open #FTSE100 set to open at 5,955, down 118 points
7.35am GMT
Asian stock markets are a deep and grimy sea of red today, as fears over China rattle investors across the region.
That's what $1.2 trillion in losses looks like in Asia.. another brutal session in the equity markets this Thursday pic.twitter.com/Wqmh8Om6gr
7.33am GMT
Chinese regulators held an emergency meeting today to discuss the crisis -- but they haven't taken any decision on new action, Bloomberg reports.
Trading halted in #china in just 29 minutes! Regulator calls emergency meeting but no decision on action pic.twitter.com/BI8IDPMgG8
7.24am GMT
From Beijing, my colleague Tom Phillips sums up the dramatic action in China today:
China halted the day's trading within 30 minutes of opening on Thursday morning as shares plunged by more than 7% - triggering an automatic "circuit breaker" - and authorities accelerated the devaluation of the Chinese yuan.
China's recently installed "circuit breaker" mechanism paused trading for 15 minutes after the CSI300 index fell 5% in the first 13 minutes of trading. On resumption of trading it fell further, triggering the day's halt.
Christopher Balding, a professor of finance and economics at Peking University's HSBC business school, said he expected more government action to halt the stock market drops, "whether it is changing the circuit breakers, whether it is again intervening in the market, whether it is extending the ban on large selling by institutions."
"I'd be surprised if they let this continue going down. By almost any measure, the Chinese stock market is pretty over valued and so you would be looking at a pretty significant fall to get back to a reasonable valuation. I would be surprised if they allowed it to move back to more appropriate levels."
Related: China share trading halted after market plunges 7% in opening minutes
7.14am GMT
Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
The great concern for global markets is that the dramatic pace of the currency devaluation seems to indicate a far greater weakness in the Chinese economy than is easily perceivable in its publicly released statistics.
A lot of people in the market are speculating that this is primarily about boosting exports and stimulating the slowing economy. While this no doubt will help, the primary concern for the government is deflation.
Our European opening calls: $FTSE 5955 down 118 $DAX 9979 down 235 $CAC 4391 down 89 $IBEX 9002 down 196 $MIB 20132 down 291
Related: George Osborne warns UK economy faces 'cocktail of threats'
Results @marksandspencer pretty ugly...GM (clothing/homeware) LFL sales -5.8% well below -2% estimate. Food LfL +0.4% trailing estimates
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