After a drop in China's stock market in the first day of trade in 2016, global stock market experiences a plunge everywhere in the world. Stock marked registerd declines in Europe and U.S. stoks were opening 2016 on a grim note as well.
On Monday at 9:35 a.m. Easter time, the Dow Jones industrial average sank to 17,078 by as much as 347 points, or 2 percent. The Nasdaq composite fell to 4,895, losing 112 points, or 2.2 percent. The Standard & Poor's 500 index went down to 2,006, losing 37 points, or 1.8 percent. Bank stocks were hit hard as well. For instance, JP Morgan stocks went down by 3.65 percent, according to Reuters.
Overseas markets lost even more. European indexes lost more than 2 percent and Germany's Dax index lost as much as 4.3 percent. In China the trading session ended up in an emergency suspension after the main index fell nearly 7 percent.
The sharp drop on China's stock market was caused by escalating tensions in the Middle East but also by weak Chinese manufacturing data. The survey indicating that China's factory activity contracted again in December was one of the main causes of the sharp decline registerd on the stock market. The news that Iran and Saudi Arabia had broken off diplomatic ties sent gold and oil prices higher.
Under new "circuit breaker" rules with role to curb market volatility, for the first time the trading on China's Shenzhen and Shanghai stock exchanges was suspended when stocks went down by 7 percent. This is a new sign of trouble adding to increasing worries about the health of world's second-largest economy.
In December the Caixin/Markit purchasing managers' index went down to 48.2 in December. Reading bellow 50 signify contraction in the factory activity sector. This was the 10th consecutive month of diminishing manufacturing activity in China, according to The Economist.
Monday's sell-off in China had also negative effects across the Asian region. Hong Kong's Hang Seng plunged 2.6 percent while Japan's Nikkei 225 dropped 3.1 percent, according to BBC News.
