Asian stocks tentative after plunge on first trading day of 2016 sparked by China concerns

SEOUL, South Korea – Asian stock markets were muted Tuesday even as China’s benchmark stabilized a day after plunging nearly 7 per cent.

The Shanghai Composite Index wavered between gains and losses. By early afternoon, it was up 0.5 per cent at 3,312.56. Japan’s Nikkei 225 was down 0.4 per cent at 18,374.39 and Australia’s S&P/ASX 200 slipped 1.6 per cent to 5,186.30.

South Korea’s Kospi was up 0.6 per cent to 1,930.37 while Hong Kong’s Hang Seng was down 0.1 per cent to 21,315.36. Stocks in Southeast Asia were mixed.

Global stocks started the new year on a grim note as poor manufacturing reports from China and the U.S. triggered fears about waning growth around the world. The steep fall in Chinese markets on Monday prompted authorities to halt trading by using a new “circuit-breaker” mechanism for the first time.

“Traders are not seeing clarity on the direction of growth. As we are all too familiar with, uncertainty is quite bad for the financial markets,” said Bernard Aw, strategist at IG in Singapore, in a market commentary.

Tensions in the Middle East also unnerved investors. Saudi Arabia severed diplomatic relations over the weekend in a dispute over the Saudis’ execution of a Shiite cleric. Concerns about a potential threat to world oil supply pushed up prices of oil.

Wall Street finished lower on Monday. The Dow Jones industrial average dropped 1.6 per cent lower to 17,148.94. The Standard & Poor’s 500 lost 1.5 per cent to 2,012.66. The Nasdaq composite fell 2.1 per cent to 4,903.09.

Benchmark U.S. crude added 30 cents to $37.06 per barrel on the New York Mercantile Exchange. The contract fell 28 cents to close at $36.76 a barrel on Monday. Brent Crude, the international standard, added 26 cents to $37.48 per barrel in London.

In currencies, the dollar slipped to 119.38 yen from 119.43 yen in the previous trading session. The euro rose to $1.0830 from $1.0826.