January 04, 2016 - 9:29 AM
TORONTO - Stock markets around the world got off to a bad start in the first day of trading for 2016, sparked by a sharp drop in China that triggered a new "circuit breaker" mechanism that closed trading early to limit losses.
The Toronto Stock Exchange's S&P/TSX composite index was down 234.06 points or 1.80 per cent after nearly two hours of trading, taking the index to 12,775.89 at late morning.
The Canadian dollar traded at 71.61 cents U.S., down 0.64 of a cent from Thursday's close before the New Year holiday.
In New York, the Dow Jones average was down 447.16 points or 2.57 per cent at 16,977.87, the broader S&P 500 index declined 51.34 points or 2.51 per cent to 1,992.60 and the Nasdaq lost 143.01 points or 3.11 per cent to 4,450.26.
The plunge began on the Shanghai index, which dived 6.9 per cent to 3,296.66 before the market was closed early to avert steeper falls. It was the first day of operation for a the new "circuit breaker" mechanism.
The Shanghai market's decline followed weak reports on its manufacturing sector, which appeared to contract in December for the 10th straight month, according to a private-sector survey of purchasing managers.
The Caixin/Markit index fell to 48.2 in December from 48.6 the previous month. Numbers below 50 indicate contraction.
The February crude contract was originally up but later in the morning was down 45 cents at US$36.59 per barrel and the February contract for natural gas was unchanged at US$2.33.
The price of oil was partially helped by fresh political tensions in the Middle East. Saudi Arabia's execution of a Shiite cleric, along with 46 others on Saturday, sparked official outrage and protest in Iran and several other countries.
The February gold contract was up $15.80 to US$1,076.00 an ounce. Gold is often seen as a safe haven in times of political or economic uncertainty.
News from © The Canadian Press, 2016