Chinese stock markets have resumed their downward spiral at the start of the week with the country’s Shanghai Composite Index closing 5.3% lower on Monday, Sky News reports. Investor anxiety, coupled with disappointing inflation data over the weekend, are just some of the factors which led the index to its lowest point since September.
It was also bad news for the Shenzhen Composite Index, which tumbled by 6.6% to finish the day on 1,847.10 points. However, markets in Europe were able to shake off the latest gloom. They have suffered a dismal start to 2016 on the back of China’s turmoil over the last week.
But in the latest session the FTSE 100 Index rose modestly – though remaining below the 6,000-mark – while markets in Germany and France saw stronger gains.On Friday, Chinese markets had risen by about 2% after officials in Beijing decided to suspend a controversial “circuit breaker” system which was designed to halt share volatility.
The mechanism was triggered twice during last week’s trading, with some analysts claiming that the measure added to jitters across the globe instead of assuaging them. This week sentiment was dragged lower after figures released on Saturday showing China’s consumer price inflation in December stood at 1.6% – considerably below the government’s target of “about 3%”.
Zhang Yanbing, an analyst with Zheshang Securities, told the AFP news agency: “The market is already in a downward spiral and it’s still exploring the bottom after last week’s plunge. “The economy remains weak and there’s no driver for a market rebound.”
Tensions are expected to remain high ahead of fresh Chinese trade data on Wednesday, which is expected to confirm there have been further declines in export and import rates – compounded by the continuing volatility of the yuan.
Later in January, official data on growth in the fourth quarter, as well as across 2015 as a whole, is also forecast to show that China’s economy expanded at its slowest pace for 25 years.