China stocks take another tumble after huge decline
BEIJING -- Chinese stocks tumbled again Tuesday after their biggest decline in eight years while most other Asian markets rebounded from a day of heavy losses.
The Shanghai Composite Index fell 6.4 percent in the first minutes of trading but later trimmed some of those losses and was down 5.5 percent at 3,035.83. The Shenzhen Composite Index for China's smaller second exchange lost 4.6 percent.
Tokyo's Nikkei 225, however, was up 2.1 percent at 18,147.42 after losing 4.6 percent the previous session. Hong Kong's Hang Seng, which also lost 4.6 percent on Monday, gained 1.3 percent to 21,429.17. Sydney's S&P ASX 200 advanced 1.4 percent to 5,073.20 and Seoul's Kospi was steady at 1,829.06 after shedding 3 percent the previous day.
China's fall was the latest in a series of jarring declines that have defied multibillion-dollar government efforts to stem a slide in prices following an explosive market boom.
Monday's 8.5 percent loss for the Shanghai index triggered a global selloff.
On Wall Street, the Dow Jones industrial average lost 3.6 percent. The Standard & Poor's 500 fell 3.9 percent, putting it in correction territory, the term for a drop of at least 10 percent from a recent peak. In Europe, Germany's DAX index fell 4.7 percent, France's CAC-40 slid 5.4 percent and Britain's FTSE 100 lost 4.7 percent.
"There was no clear catalyst for the global stock meltdown. The lack of clarity makes it difficult to assess what is needed to stem the rout," said Bernard Aw of IG Markets in a report.
"A coordinated policy response is critical, and much of this needs to come from Asian economies," Aw said. "A spate of better economic news may help to allay concerns that global growth is not deteriorating. Certainly, improvements in the Chinese economy will be welcomed."
China's declines reflecting the cooling of a market boom that was driven by official policy and cheerleading from the government press, rather than by economic fundamentals. The Shanghai index rose 150 percent beginning late last year even as the world's second-largest economy was cooling, leaving little to support higher prices once investor enthusiasm faltered.
At Monday's close, the Shanghai index was down 38 percent from its June 12 peak and just under 1 percent from its closing on Dec. 31. That meant the latest declines have wiped out this year's gains.
Investors abroad are increasingly uneasy about China's outlook, though there has been little change in forecasts and some areas including retailing still look relatively strong.
"Investors are overreacting about economic risks in China," said Mark Williams of Capital Economics in a report.
"The surge in prices that started a year ago was speculative, rather than driven by any improvement in fundamentals," Williams said. "A combination of poor data and policy inaction in China may have triggered today's market falls but the bigger picture is that we are witnessing the inevitable implosion of an equity market bubble."
In currency markets, the dollar gained to 119.8390 yen from Monday's 118.6930 yen. The euro edged down to $1.1543 from the previous session's $1.1591.
Oil rebounded from Monday's steep declines.
Benchmark U.S. crude gained 24 cents to $38.42 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged $2.21 on Monday to close at $38.42.
Brent crude, used to price international oils, advanced 26 cents to $42.95 per barrel in London. It fell $2.77 the previous day to close at $42.69.