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Asian Stocks Plunge as Global Growth Fears Linger

Chinese stocks plunge 2% as global market sell-off intensifies.

 

Volatile commodity prices triggered a sharp sell-off in Asian stocks on Tuesday, as global growth woes kept investors on the sidelines ahead of China’s seven-day National Day Holiday that starts later this week.

In China mainland stocks declined across the board, with the Benchmark Shanghai Composite Index (NYSEARCA:FXI) falling 2%, extending its losses to more than 41% since mid-June.

Hong Kong’s Hang Seng Index closed down 3%.

Tokyo’s leading Nikkei Index (NYSEARCA:EWJ) plunged 4.1%, as all 225 of its members ended in the red.

Volatility from the Asian session extended into Europe on Tuesday, with averages in London (NYSEARCA: EWU) and Frankfurt (NYSEARCA:EWG) declining 0.8% and 0.4%, respectively. The pan-European STOXX 600 closed down 0.7% on the day.

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Wall Street ended mixed after a choppy session. The Dow Jones Industrial Average (NYSEARCA:DIA) clawed back 47.24 points or 0.3% to close at 16,049.13.

The Nasdaq Composite Index (NYSEARCA:QQQ) closed down 0.6% after biotechnology shares failed to sustain a midday rally. The Nasdaq’s biotechnology index declined more than 6% on Monday.

The S&P 500 Index (NYSEARCA:SPY) edged up 0.1% to 1,884.09 after falling back into correction on Monday.

The S&P 500 continues to fall below support levels amid global risk-aversion. The index is likely to test initial support at 1,873, followed by 1,864. On the upside, resistance is likely found at 1,889, followed by 1,895.

After spiking to three-week highs on Monday, the VIX Volatility Index (NYSEARCA:VXX) declined 0.80 points to 26.83.  The VIX has been trending well north of 20.00, its long-run average, since the Black Monday sell-off on August 24.

Final Word: Modest gains in commodity prices helped US stock futures recover on Tuesday, although weakness in China is expected to keep prices trending lower for the foreseeable future.  Trading volumes in China were 52% lower than the 30-day average on Tuesday as investors looked ahead to the week-long National Holiday that begins on Thursday.