The first trading day of 2016 is not a pretty picture. Worries over continuous slowing growth in China have reappeared. Chinese stock indexes dropped 7%, which has trigged a new circuit breaker implemented by the government. The trigger activates a trading halt, and as the second largest economy in the world, such a sell-off naturally effaced stock market indexes around the world.
The Dow Jones industrial average, which wasn’t performing as well in 2015 as in previous years, declining 2.2% over the course of the year, is down more than 390 points, or more than 2%. The Standard & Poor's 500 stock index also down more than 2% lower and Nasdaq was down closer to 3% at some point.
The exact reason for the sell-off in China is data revealed from manufacturing surveys, which showed that Chinese factory activity shrank at an even faster pace in December than it did in November. Which further reinforces the notion that China is slowly transitioning from a manufacturing economy to a service economy.
China's central bank fixed the yuan at a 4 1/2-year low and mainland Chinese shares fell 7 percent. Stock exchanges halted trading on the first day so-called circuit breakers came into effect.