A Chinese stock market slump prompted about 1300 companies on China's Shanghai and Shenzhen stock exchanges to stop trading in an unprecedented move yesterday, following plunges of nearly 7% and 4% respectively in the main bourses' morning trading.
Australia's ASX was quick to reflect the Chinese plunge, with commodity stocks particularly hard hit and ending the day down, while the NZX was down 0.6%. Shanghai closed down at 3.88%.
With China's bourses awash with blood, today's focus will be the overnight reaction in US markets.
China's central bank was reported to have moved to buy some stock to steady the turmoil.
Masked by Greece's debt drama, China's markets have been unravelling with a savage $US3.2trillion ($NZ4.8trillion) correction, or 30% plunge in value, during just the past three weeks - on the back of 150% gains during the past year.
Craigs Investment Partners broker Peter McIntyre said the trading halt was put in place ''to stem the bleeding''.
''I've never seen such volatility across one market, and that includes through the global financial crisis,'' he said.
Because commodities were hard hit yesterday; copper being down 4%, nickel down more than 9% and aluminium 1.7%, Australian stocks overall were hard hit, Mr McIntyre said.
''The knock-on effect into the commodities market is a concern; Australia has been hammered,'' he said.
He said US markets had been focused on Greece, so the overnight news would be whether attention shifted to China.
''The two [Greece and China] in tandem is a little unsettling,'' Mr McIntyre said.
Subsequently, the Australian dollar plunged against all currencies of its trading partners, including the US, Canadian and New Zealand dollars, Japanese yen, British pound and the euro.
Even gold, which is usually an attractive haven in times of turmoil, was down, albeit just 0.25% at $US1153 ($NZ1736).
Bloomberg News reported that trading had been halted in more than a third of companies trading on the Shanghai and Shenzhen stock markets after hundreds of companies requested suspensions, AFP reported yesterday.
The Australian Financial Review was quick to dub the slump ''China hurtling towards its own 1929 crash''.
The Guardian reported that in the unprecedented move, 660 companies requested their shares be suspended, while many more had their shares automatically suspended after their value dropped by the allowed floor of 10%.
China's central bank said yesterday morning that it would support China Securities Finance Corp to buy shares of smaller companies to steady the stock market, The Guardian reported.
During the past week, China's securities regulator relaxed rules on using borrowed money to buy shares, last weekend the People's Bank of China cut lending and deposit rates, while yesterday it also eased rules for insurance companies to invest in the stock market, allowing them to invest up to 10% of their assets in a single blue chip, up from the previously allowed 5%.
The Guardian reported in a statement yesterday morning, China's securities regulator said there was ''panic'' in the stock market with irrational selling off increasing and ''leading the stock market to a situation of intense liquidity''.
The companies' decision to stop trading moves came after iron ore prices tumbled another 4.6% overnight to below $US50 a tonne, AAP reported.
