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Asian shares down sharply as trading halt again hits Shanghai

Published 01/06/2016, 10:05 PM
Updated 01/06/2016, 10:09 PM
© Reuters.  Shanghai share trading halted on circuit-breaker rules

© Reuters. Shanghai share trading halted on circuit-breaker rules

Investing.com - Trading on the Shanghai Stock Exchange was halted Thursday about 30 minutes after opening when the benchmark Shanghai Composite fell 7.21% triggering the circuit-breaker system.

Trading was suspended for 15 minutes when the CSI 300 fell more than 5%. When trading resumed the index extended losses to more than 7% and trading was shut for the day.

The Shanghai Composite Index was last down 7.32% to 3115.89. The S&P/ASX 200 eased 1.90% and the Nikkei 225 fell 1.78%.

It is the second halt following the introduction of the circuit-breaker Monday. The stock market was closed Monday afternoon because of a 7% fall.

Earlier the market had digested the minutes from the Federal Open Market Committee's (FOMC) December meeting, released on Wednesday, showed that all of its voting members were in agreement that labor market and inflation conditions at the time were appropriate to raise short-term interest rates modestly by 25 basis points.

Last month in a historic decision, the FOMC abandoned a seven-year zero interest rate policy by approving its first rate hike in nearly a decade. Previously, the FOMC's benchmark Federal Funds Rate, remained at a zero bound range between zero and 0.25% for every meeting dating back to December, 2008. Furthermore, the members agreed that all subsequent rate hikes would be gradual and would remain low in the long-run future for some time.

In Australia, building approvals for November month-on-month plunged 12.7%, well below the 3.0% fall expected. Private house approvals fell 0.5% in November.

As well, exports rose 1% and imports fell 1% for an overall trade balance deficit of A$2.91 billion, a tad narrower than the A$3.1 billion seen.

Overnight, U.S. stocks plunged more than 1% on Wednesday completing their worst three-day start to a year since 2008, as crude oil prices plummeted to fresh multi-year lows and the Federal Reserve reiterated its plan to raise interest rates gradually over the next year.

Investors also reacted to gloomy geopolitical and economic news in Asia, as North Korea announced that it successfully detonated a miniature hydrogen bomb on Wednesday morning, while China said activity in its service sector in December fell to its lowest level in 17 months.

The apparent escalation of North Korea's nuclear capabilities spooked markets throughout Asia and sent a ripple effect through equity markets around the world, a host of experts expressed intense skepticism that Wednesday's test contained a highly-destructive hydrogen bomb. The test triggered a 5.1 magnitude earthquake, according to the United States Geological Survey, nearly matching the Richter scale readings of three other tests conducted by North Korea since 2006. The size of the tremor is generally regarded as too small for a hydrogen test.

The Dow Jones Industrial Average plummeted 252.15 or 1.47% to 16,906.51, while the S&P 500 Composite index fell 26.45 or 1.31% to 1,990.26, extending the weakest yearly starts for the major indices since the Financial Crisis. The Dow and the S&P 500 both fell below key technical levels on Wednesday, dropping under 17,000 and 2,000 points respectively. The NASDAQ Composite index also fell 55.66 or 1.14% to 4,835.77, as U.S. equities erased nearly half of their gains from a productive fourth quarter in a span of just three days.

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