China started the global New Year with some bad economic news on Monday — weaker-than-forecast manufacturing activity and a currency devaluation — prompting a sharp decline in mainland Chinese equities. Trading was halted for the day on the Shanghai and Shenzhen stock markets after the Shanghai Composite Index plummeted 7 percent, triggering a "circuit breaker" mechanism China put in place late last year. The Chinese data, mixed with rising tensions between Iran and Saudi Arabia, pushed European and other Asian stock markets lower on Monday.
"A fall in Chinese markets has brought about a jittery start to the year," Investec economists said in a note. Japan's Nikkei 225 closed down 3.1 percent, Hong Kong's Hang Seng closed down 2.7 percent, and in Europe, Germany's DAX led regional losses, dropping 3.3 percent in early trading. The 10th consecutive month of contraction in China's factory purchasing indicated to investors that China's economy is not responding to government stimulus efforts, which is bad news for other nations' exports.