New Year optimism demolished after tumultuous first day of markets

Tuesday 5 January 2016
Nic Crowther's picture
Co Editor
The Shaker

As most of Australia returns to work, you’d think that there would be a sense of optimism and feeling of excitement about the year ahead.

If there was, it couldn’t have lasted much past midday on Monday when financial markets around the world came to earth with a thud.

First to go was Shanghai. 2015 was a train wreck for the Composite. The index finished the year down 31.5% to 3,539 - from a June high 5,166. As a result, regulators installed a new switch to close trading if the index moved by 7% in a single session.



Well, guess what? Following the release of more bad domestic manufacturing figures, the Composite was closed 90 minutes before the end of the first trading day of the year after being routed down to 3,296.66.

This marks the tenth consecuive month of tightening manufacturing numbers. Naturally, there is flow-on from this result and the world’s most valuable company. Apple (NSQ: AAPL), is copping the brunt with around 30% wiped of its market cap over the last six months. China is the big hope for Apple if it is to return to the giddy growth that saw many analysts predict total value of more than $1 trillion at any time over the last four years.



However, slowing growth in China is making investors nervous about the tech giant’s capacity to increase revenues by selling more iPhones in the world’s biggest market, and as such Apple’s stocks have fallen in line with the Shanghai Stock Exchange.

Finally, Australia’s embattled electronics retailer, Dick Smith (ASX: DSH), has finally gone into voluntary administration as its board reels from a disastrous 2015 – including an underwhelming sale in the pre-Christmas period.



It looms like the end of the road for the famous retailer. With questions around this year’s Federal Budget and tough times predicted for the rest of the year, there could be plenty more hitting the wall before 2016 is over.