Tuesday, 5 March 2024
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Stock Market

Despite efforts to support markets, Chinese shares plunge

  • Beijing’s market regulator’s promise to rein in abuses and shield small investors.
  • Chinese stocks ended last week at their lowest point in five years.
  • The S&P 500 index closed at 4,958.61, up 1.1%, thanks to significant increases for Amazon and Meta Platforms.

Notwithstanding Beijing’s market regulator’s promise to rein in abuses and shield small investors, Asian equities were largely down on Monday. The biggest decliners were Chinese shares.

Shenzhen’s smaller market saw its main index plummet 5.4%, while the Shanghai Composite index dropped almost 2% before making up some of the ground that was lost. The price of oil increased and U.S. futures fell.

Asian stocks

The China Securities Regulatory Commission declared on Sunday that it would direct more medium- and long-term money into the market and step up enforcement of laws against crimes such as market manipulation and malicious short selling.

Investors who have been withdrawing their money from the markets for months did not seem to be very comforted by this decision. Chinese stocks ended last week at their lowest point in five years.

Data indicating that China’s services sector developed at a slightly slower pace in January—the purchasing managers’ index dropped to 52.7 from 52.9 in December—dealt another shock to market mood. When compared to the prior month, expansion is indicated by a PMI above 50.

Big Tech stocks helped Wall Street reach new heights on Friday, even though most other stocks declined as concerns about the potential perils of a booming economy returned. The S&P 500 index closed at 4,958.61, up 1.1%, thanks to significant increases for Amazon and Meta Platforms.

While the Nasdaq surged 1.7% to 15,628.95, the Dow Jones Industrial Average increased by a more measured 0.3% to 38.654.42. Following news that U.S. firms employed far more people last month than economists had predicted, stocks were pressured by significantly higher bond market yields.

Although this benefits workers and reduces the likelihood of a recession, it may also keep inflation pressures high and delay the Federal Reserve’s decision to lower interest rates.

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