China crackdown weighs heavily on global markets

Global stock markets notched losses on Tuesday as investor sentiment soured on concerns that Chinese authorities may over-extend their regulatory crackdown.

The US’ main benchmarks dropped during the opening session, with the tech-heavy Nasdaq registering the worst performance, down 1.76 per cent.

The blue-chip S&P 500 fell 0.78 per cent, while the Dow Jones lost 0.51 per cent.

Michael Hewson, chief market analyst at CMC Markets UK, said: “for now, the fallout looks contained, with a wider expectation that Chinese regulators are engaging in an exercise of boundary redrawing. The bigger concern is that they overreach and thus prompt widespread capital flight.”

Investors were also awaiting the publication of a string of tech-megacap results today, with Microsoft and Apple updating markets.

Yields on 10-year Treasuries were 1.23 per cent, rising from record lows yesterday.

FTSE 100 edges above 7,000

London’s FTSE 100 recovered from losses in the morning to edge back above the 7,000 mark in afternoon trading.

The capital’s premier index dipped 0.3 per cent to 7,005 during the day, much softer than this morning’s steep drop.

Sharp losses were initially driven by fears that Chinese regulators could crackdown on further sectors of their economy.

However, the index partly recovered after investors digested positive retail sales figures from the CBI.

Read more: Ministers mull ‘taking stake in Sizewell power plant’ amid China clampdown

Hewson added: “the weakness seen in Europe today appears to be a by-product of wider fears that a policy misstep from Beijing could have wider consequences for the global economy.”

The UK government is reportdely moving to remove a state-owned Chinese firm out of the Sizewell power plant project.

The losses add to a sluggish start to the week for the FTSE 100 and markets globally.

The domestically-focused mid-cap FTSE 250 and AIM shares both fell 0.24 per cent.

Winners and losers

Chemicals firm Croda International was the best performer during the opening session, surging 5.98 per cent.

Takeaway delivery company Just Eat Takeaway.com came second, adding 3.86 per cent, while packager DS Smith came third, up 1.71 per cent.

The day’s worst performer by far was hygiene products manufacturer Reckitt Benckiser after it posted results this morning highlighting the scale of impact higher input costs have had on the firm’s margins. Its shares plummeted 8.32 per cent.

The Scottish Mortgage Investment Trust was THE day’s second worst performer, losing 4.16 per cent, and IAG was third, down 3.8 per cent.

Around the world

Asian shares took the worst hits from intensifying fears over China’s regulatory clampdown.

Hong Kong’s Hang Seng plummeted 5.1 per cent, while China’s CSI 300 slid 3.53 per cent.

Japan’s Nikkei fared better, edging up 0.49 per cent in over night trading.

European shares extended losses in London – the Stoxx 600 fell 0.66 per cent during opening trading.

Read more: UK looks to remove China’s CGN from nuclear energy projects