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Chinese stocks slump

A man gestures in front of an electronic board showing stock information at a brokerage house in Hangzhou, Zhejiang province, China February 9, 2018.
A man gestures in front of an electronic board showing stock information at a brokerage house in Hangzhou, Zhejiang province, China February 9, 2018. REUTERS/Stringer

  • China's Shanghai Composite closed down 4% on Friday, other major Chinese indexes are registering similar falls.
  • Markets across Asia have fallen, following a 1,000 point loss for the Dow on Thursday.
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Like US markets before them, Chinese stocks have been hammered on Friday, falling heavily to fresh multi-month lows.

And, like the Dow Jones Industrial Average and S&P 500, they’ve also experienced a technical correction, defined as a decline of 10% or more from an indexes recent peak.

shanghai index
Investing.com

The benchmark Shanghai Composite Index closed the morning session down 4.1%, extending its losses from the recent highs to over 12.8%. The stock exchanged ended up closing the day down 4% at its lowest point since mid-2017: 

The losses were led by the telecoms sector which plummeted by 7%, followed closely by energy and financials which are both down more than 5%. Materials, industrials and consumer staples have also lost more than 3%.

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No sector is in positive territory with technology the best performer with a decline of only 1.9%.

"We are still in the depth of market volatility as sentiment was hurt by the double whammy of US market turmoil and deleveraging efforts at home," Wu Kan, a Shanghai-based fund manager at Shanshan Finance, told Bloomberg. "Risk appetite has dropped sharply and I don’t think the situation will get any better before the Chinese New Year holiday."

The SSE 50 — comprising large cap stocks listed in Shanghai — fell even more than the benchmark, closing morning trade down 5.8%. At one point it slumped by as much as 7.5%.

It’s also fallen 12.9% from January’s high, leaving it a technical correction.

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The CSI 300 — made up of large cap stocks listed in Shanghai and Shenzhen — also closed deep in negative territory, nursing a loss of 4.43%

Other markets aligned to small caps and tech stocks were also under pressure, just not to the same degree as the carnage seen in large caps.

The CSI 500, Shenzhen Composite, and tech-heavy ChiNext Index closed the morning session down 3.6%, 3.1%, and 2.9% respectively. They have also entered a technical correction, only earlier in the week.

The sharp plunge followed another ugly performance from US stocks which fell heavily into the close, mirroring the price action seen on Monday.

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The Dow Jones Industrial Average skidded 1,032 points, or 4.15%, closing at 23,860 points. The S&P 500 and Nasdaq also fell with a thud, losing 3.75% and 3.9% respectively.

Michael Hewson, a senior market analyst with CMC Markets, said in an email on Friday morning: "As a result of last night’s sell-off in the US, and this morning’s weakness in Asia, European markets look set to follow suit this morning and open lower, while the Nikkei 225 also slid into correction territory as it tested its long-term 200 day moving average."

Despite all of this gold prices, which normally rise on the back of rising uncertainty, have remained steady and are currently languishing near two week lows.

As seen in the scoreboard below, while China is leading the losses, it’s been an ugly session for all major markets across Asia. Here's how things stand at 7.20 a.m. GMT (2.20 a.m. ET):

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  • Australia ASX 200 5,838.00 , -0.89%
  • NZ NZX 50 8,092.37 , -1.04%
  • Japan TOPIX 1,731.97 , -1.91%
  • Shanghai Comp 3,130.93 , -4.02%
  • Shenzhen Comp 1,679.26, -3.19%
  • HK Hang Seng 29,552.00, -3.12%
  • Sth Korea KOSPI 2,363.77, -1.82%
  • Sinagpore STI 3,370.30, -1.33%
  • Taiwan TAIEX 10,371.75, -1.49%
  • Philippines PSI 8,483.74, -1.87%
  • Indonesia JKSE 6,475.88, -1.07%
  • Malaysia KLCI Index 1,820.99, -1.00%
  • Thailand SET 1,775.28, -0.64%
  • S&P 500 Futures 2,611.00, +0.64%
Read the original article on Business Insider Australia. Copyright 2018. Follow Business Insider Australia on Twitter.
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