US stocks hit three month-low as China woes plague investors

The tumultuous start to 2016 continued to wreak havoc on financial markets around the world this afternoon, as the Dow Jones industrial average fell to a three-month low.

The opening bell on Wall Street triggered another mass sell-off as risk-averse investors offloaded stocks amid concerns about the Chinese economy and threats to global security after North Korea tested a hydrogen nuclear bomb.

The Dow Jones industrial average fell sharply by 237.80 points, or 1.39pc, soon after markets opened. It last touched this level three months ago when it hit 16,912 in early October.

Meanwhile, the S&P 500 opened down 1pc, while the Nasdaq Composite index fell 1.3pc.

In European, shares hit a three week low. The pan-European FTSEurofirst 300 index tumbled 1.8pc to its lowest level since mid-December 1,385.62. Germany’s DAX lost 1.7pc, while the CAC in Paris and the Spanish IBEX slipped 1.9pc and 2pc, respectively.

Britain’s benchmark index also stumbled, hitting a three week low. Just after 2pm the FTSE 100 fell 103.39 points, or 1.68pc, to 6,033.90. On December 15, it closed at 6,017.79.

Alastair McCaig, an IG analyst, said: “Only three days into the new year and both the economic data and equity markets in China are giving investors plenty to worry about.

“The People’s Bank of China has already suspended equity markets, closing them early for the day, injected 130bn yuan into the markets and has now weakened the currency. What will the fourth day of the trading year bring?”

• FTSE suffers worst stock market start in 16 years as China-led malaise wipes £38bn off index

The blue chip index was led lower by the mining sector as commodity prices continued to falter after the Chinese economy allowed the yuan to weak further.

As fears plagued investors the world’s largest metals consumer could be in worse health than previously thought, shares in UK miners slumped.

Poor services sector data also hurt the sector dragging copper prices down to a two-week low - down 0.9pc at $4,602.

• Chinese stocks bounce back as authorities step up intervention

Activity in China’s services sector grew at its slowest rate in 17 months in December, a survey showed today. The Caixin Markit Purchasing Managers’ Index slipped to 50.2 last month from 51.2 in November - yet another indication the economy may be running out of steam.

Anglo American hit the bottom of the FTSE - down 7pc to 262.9p, while BHP Billiton and Rio Tinto lost 6.5pc and 5.3pc, respectively. Meanwhile, Glencore was changing hands at 84p - 4.8pc lower.

Investor sentiment was further dented on threats to global security after North Korea carried out its latest nuclear bomb test.

With tensions between Saudi Arabia and Iran also fraught, the price of Brent crude dipped below $35-a-barrel. In its wake, Royal Dutch Shell B shares lost 2pc and BG Group was trading 1.4pc lower.