China currency war fears wipe $2.6 trillion off global markets in four days

Equities suffer their worst start to a calendar year since the bursting of the dotcom bubble in 2000 as fears over China’s exchange rate grow

Global stocks markets have seen $2.5 trillion wiped off their value in just four trading days, the worst start to a calendar year since the aftermath of the dotcom crash in 2000.

Stocks suffered another tumultuous day of trading gripped by renewed fears that the world’s second largest economy was engineering a devaluation of its currency.

European and US investors hit the panic buttons after Chinese markets were forced to suspend trading for the second time in just four days.

The blue chip CS1300 had its shortest ever day of trading at just 28 minutes after 7pc of its value was wiped out in less than half an hour.

Beijing’s emergency “circuit breaker” – designed to stem market panic – kicked in once again.

But the mechanism only succeeded in spreading panic, forcing authorities to abandon it on Thursday evening.

The circuit breaker – which imposes a 15 minute trading ban on stocks after they fall by 5pc and then 7pc – was only introduced on January 1. But analysts warned that it encouraged mass selling as investors feared they would not be able to offload shares later in the day.

“The market has been in denial,” said Michael Ingram, a market strategist at BGC Partners in London. “Make no mistake, what happens in China this year will shape the market dynamic for the next five.”

Full article: China currency war fears wipe $2.6 trillion off global markets in four days (The Telegraph)

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