NEW YORK — Shares on major exchanges fell for a sixth consecutive day on Thursday while crude prices bounced back from multi-year lows as volatile markets digested another move lower in the yuan and Chinese efforts to stabilise a sinking stock market.
Stocks on Wall Street pared losses after China suspended the circuit breaker that stops trading for the day when stocks fall 7%, a halt that occurred twice this week. Analysts and investors said the mechanism, put in place to avoid market volatility, may have backfired.
Brent crude cut a loss of more than 6% to trade down 0.4%, with traders citing short-covering. US crude, down as much as 5.5% earlier, was down 0.8%.
The 7% drop in Chinese markets overnight had triggered a flight to safety, but the circuit breaker reversal helped cut losses in other risk assets, including the US dollar.
Investors, however, remain concerned that China is struggling to keep control of the yuan. The People’s Bank of China (PBOC) set the yuan midpoint rate at 6.5646 per dollar, a 0.5% decline that was the biggest between daily fixings since August. It was the eighth consecutive day the PBOC had set a lower guidance rate.
This graphic shows how currencies, stocks, commodities, bonds and some economic indicators have reacted to the yuan decline since August.
On Wall Street, energy stocks pared a 2% loss and major indexes were down about 1%, about half as much as at their session lows. Still, the S&P 500 was down almost 4% so far this week.
"There is a wall of worry under full construction, brought on by China, fall in oil prices and uncertainty regarding quarterly earnings," said Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis.
The Dow Jones industrial average fell 211.2 points, or 1.25%, to 16,695.31, the S&P 500 lost 25.97 points, or 1.3%, to 1,964.29 and the Nasdaq Composite dropped 79.34 points, or 1.64%, to 4,756.42.
The pan-European FTSEurofirst 300 index and the eurozone’s blue-chip Euro STOXX 50 index were down 2.4% and 1.8% respectively, having fallen more than 3% earlier in the session.
A gauge of major stock markets globally fell 1.4%.
Investors fear China’s economy is even weaker than had been imagined, with Beijing, in a bid to help exporters, allowing the yuan’s depreciation to accelerate.
The US dollar trimmed losses against a basket of currencies after the Chinese stock exchanges announced the removal of the circuit breaker. The dollar index was however down 0.4% on the day.
The euro gained 0.7% to $1.0849. The yen rose 0.4% to ¥118 per dollar after hitting ¥117.30, its strongest since late August.
The benchmark US Treasury yield edged up after touching its lowest since late October. US 10-year Treasury notes were last down 4/32 in price to yield 2.1914% from 2.177% late on Wednesday.
Global oil benchmark Brent gained 0.5% at $34.40 a barrel and WTI gained less than 0.1% to $33.99 a barrel.