uploads///Performance of Developed Market ETFs

Global Markets Fall Sharply after Shanghai’s Massive Sell-Off

By

Jan. 5 2016, Updated 3:30 p.m. ET

Poor Chinese economic data lead Shanghai’s massive sell-off

On Monday, January 4, 2016, China’s Shanghai Composite Index fell 7%. For the first time, it touched the new “circuit breaker” introduced by Chinese market regulators after the August 2015 market crash due to devaluation of the yuan. The China Caixin Purchasing Managers’ Index (or PMI) data also came in that day.

The manufacturing PMI data stood at 48.2 in December compared to 48.6 in November. It was far below the consensus expectation. According to a Reuters poll, it was expected to be 49.0. Levels below 50 indicate contraction in manufacturing activity.

Article continues below advertisement

Geopolitical tension between Iran and Saudi Arabia

Growing tensions in the Middle East may raise concerns over possible oil supply disruptions. Crude oil prices rose in Monday’s trading session but closed a little lower due to global sell-off pressures. The United States Oil ETF (USO) fell marginally on January 4, 2016.

Over the weekend, after Saudi Arabia executed 47 people, Iran warned Saudi Arabia that it would face immediate consequences for the executions. Saudi Arabia cut diplomatic ties with Iran and gave 48 hours for Iranian diplomats to leave the country.

FEZ and EWJ fell sharply

The SPDR Euro STOXX 50 ETF (FEZ), the iShares MSCI Eurozone ETF (EZU), and the iShares MSCI Japan ETF (EWJ) fell 2.1%, 1.6%, and 1.6%, respectively, on Monday, January 4, 2016. This followed the Chinese market sell-off. Major holdings of FEZ such as Volkswagen (VLKAY), Total (TOT), and Daimler (DDAIF) fell 6.6%, 1.7%, and 4.2%, respectively, that day. The SPDR S&P 500 ETF (SPY) fell 1.4% on the same day on the back of the global sell-off.

Next, we’ll see how FEZ’s various industries performed on January 4, 2016.

Advertisement

More From Market Realist

  • Morgan Stanley sign and stock numbers
    Macroeconomic Analysis
    Morgan Stanley's Buyback Stock Picks in 2021
  • Black Wall Street sign is sign of ethical investing
    Macroeconomic Analysis
    Ethical Investing Stocks and Funds for Your 2021 Portfolio
  • New York City skyline and Goldman Sachs logo
    Macroeconomic Analysis
    Goldman Sachs: Options Trade Picks to Play Earnings Season Volatility
  • Woman working on a laptop
    Macroeconomic Analysis
    Why NOBL ETF Could Offer Upside Potential in 2021
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.