China Enters Bear Market, European Markets Extend Losses

China Enters Bear Market, European Markets Extend Losses

Friday was no different than the earlier sessions as both the Asian and European markets continued their southbound journey. Though the U.S. markets closed on a positive note, the falling oil prices and lack of encouraging news from China dominated the overall market sentiment.

State-induced measures see no result

Among the Asian markets, the Shanghai SE Composite Index recorded the biggest fall of 3.55% and settled at a level of 2,900.97, depicting a 21% fall from its December high. The better-than-expected Chinese trade readings did not help cheer the markets as investors concerns over the economy grew deeper. The Chinese stocks have entered the bear market territory for the second time in seven months as the government interventions appear to be ineffective in calming the nerves.

The fall is mainly driven by the new development reported by the International Finance News, which said that the Shanghai banks have decided not to accept shares of smaller companies listed on exchanges as collateral. The investors have read it as another sign of trouble in raising cash from equities, thus, sending the index down on the day.

Europe and the U.S.

Back in Europe, the major stock indices extended losses on the back of dwindling oil prices, China’s economic crisis and auto worries. France’s CAC 40 shed nearly 1.08%, followed by Europe’s Euronext 100 that was down by 0.94% to 837.32.

Meanwhile, the previous day rally in the U.S. markets was partially induced by a speech from St. Louis Federal Reserve President James Bullard, who said that the exception for U.S. inflation is falling, which is a point of concern. Analysts are breaking this speech into an indication that the rate hike by the Federal Reserve is much far than anticipated.

Oil retreated from its early day losses and was seen trading above $30 per barrel after dipping to a level below it. However, the price of Brent crude remains under pressure the entire day.