US stocks plunge following global selloff

New York, Jan 5 (IANS) The US stocks traded sharply lower in the morning session on Monday, the first trading day of 2016, amid global market rout and geopolitical tensions between Iran and Saudi Arabia.

At midday, the Dow Jones Industrial Average plunged 423.64 points, or 2.43 percent, to 17,001.39. The S&P 500 dove 47.12 points, or 2.31 percent, to 1,996.82. The Nasdaq Composite Index plummetted 136.01 points, or 2.72 percent, to 4,871.40 points, Xinhua news agency reported.

China’s shares tumbled 7 percent on Monday, triggering the new “circuit breaker” mechanism, as the Caixin General China Manufacturing Purchasing Managers’ Index (PMI) is the 10th month in a row below the 50-point level which demarcates contraction and expansion.

Tokyo stocks also plunged on the first trading day of the year as below-par manufacturing data from China compounded a dour market mood, with sentiment initially dashed by Wall Street’s slump at the end of last year.

The US stocks continued to fall following volatile session on Thursday, the last trading day of 2015, as investors digested the worse-than-expected initial jobless claims.

Saudi Arabia cut off diplomatic ties with Iran over the weekend and asked all Iranian diplomats to leave the country within 48 hours.

Analysts said the heightened geopolitical tensions in the Middle East sent traders scurrying from stocks to safe haven assets.

On the economic front, the US December ISM manufacturing Index was 48.2, below market expectations and down from November’s 48.6 points.

Tokyo stocks drop on Tuesday
Tokyo stocks lost ground on Tuesday morning as a dour market mood continued following a global equity rout a day earlier and concerns about Chinese markets and a potential slowdown.

As of 9.15 a.m., the 225-issue Nikkei Stock Average dropped 84.48 points, or 0.46 percent, from Monday to 18,366.50, Xinhua news agency reported.

The broader Topix index of all First Section issues on the Tokyo Stock Exchange, meanwhile, fell 7.22 points, or 0.48 percent, to 1,502.45.

Early decliners comprised pharmaceuticals, agriculture and fisheries, and insurance-linked issues.

Chinese yuan weakens
The central parity rate of the Chinese currency renminbi (yuan) weakened by 137 basis points to 6.5169 against the US dollar on Tuesday, according to the China Foreign Exchange Trading System.

In China’s spot foreign exchange market, the yuan is allowed to rise or fall by two percent from the central parity rate each trading day, Xinhua reported.

The central parity rate of the yuan against the US dollar is based on a weighted average of prices offered by market makers before the opening of the interbank market each business day.

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