BEIJING (AP) – China’s stock market benchmark plunged 5.5 percent on Friday and other Asian markets were off sharply after the Dow Jones industrials on Wall Street plummeted more than 1,000 points, deepening a week-long sell-off.
Asian markets followed Wall Street down after the Dow entered “correction” territory for the first time in two years.
The Shanghai Composite Index dipped 5.5 percent but recovered slightly to end morning trading down 4.1 percent at 3,127.91. Tokyo’s Nikkei 225 was off 3.2 percent at 21,180.28 and Hong Kong’s Hang Seng fell 4.2 percent to 29,142.87. Benchmarks in Australia, South Korea and Southeast Asia also retreated.
Financial analysts regard corrections as a normal market event but say the latest plunge might have been triggered by a combination of events that rattled investors. Those include worries about a potential rise in U.S. inflation or interest rates and whether budget disputes in Washington might lead to another government shutdown.
“Markets are down again today, maybe unnerved by fears that the U.S. Senate will not pass a budget bill in time to avoid a U.S. government shutdown,” said Rob Carnell of ING in a report. “With financial markets vulnerable at the moment, this was not great timing for such political brinksmanship.”