U.S., world stock markets slide as panic in China spreads

Global stock markets fell for a sixth day Thursday as another collapse in China’s ailing share market spread like contagion across the world.

It all began on Thursday in a flash.

Chinese stocks traded for less than 30 minutes, slumping 7 percent before triggering the second emergency market closure this week and generating talk of a crisis.

In Europe, the FTSE 100 index fell 2.5 percent in early London trading, while Germany's Dax index slipped 3.5 percent.

In the United States, stocks fell more than 2 percent. The Dow Jones industrial average, which tracks 30 blue-chip stocks, and the Standard & Poor’s 500, a broader measure of the market, were both down about 2.3 percent. The tech-heavy Nasdaq suffered the deepest losses, falling 3 percent.

The selloff was widespread, even hitting tech giants Apple and Amazon, which were down 4 percent and 3.7 percent respectively. JPMorgan Chase slid 4 percent, while Nordstrom tumbled 5.5 percent.

Against a backdrop of a weak economy and, some argue, an overvalued currency, confidence in China had long been in short supply. But investors also blamed ill-considered and poorly explained moves by the authorities for fueling the panic this week.

Market confidence was dented early Thursday by a sharp devaluation in the Chinese currency, which was interpreted as a sign that the authorities are becoming increasingly rattled about the nation’s ailing economy.

Weak economic data had sent share prices plunging precipitously Monday, and government intervention to prop up the market by buying shares the following day did little to restore investor confidence.

“The bottom line is the market is not supported by fundamentals,” said Andy Xie, an independent economist based in Shanghai. "People in the know want to get out."

Influential investor George Soros said that China had a “major adjustment problem” on its hands. “I would say it amounts to a crisis,” he told an economic forum in Sri Lanka, according to Bloomberg News. “When I look at the financial markets, there is a serious challenge which reminds me of the crisis we had in 2008.”

For U.S. investors, the turbulence continues an inauspicious start to a year many market watchers have already predicted will be rocky. On Monday, stocks tumbled more than 3 percent before recovering, then declined again on Wednesday.

The market tumult also comes as the Federal Reserve has begun to remove some of its support of the U.S. economy. On Wednesday, Fed documents indicated the central bank is likely to move cautiously as it looks toward continuing raising rates. Those efforts could be derailed if a troubled global economy weighs on U.S. markets, analysts have said.

This story was originally published January 7, 2016 at 4:56 PM with the headline "U.S., world stock markets slide as panic in China spreads."