China manufacturing sector contraction brings shocks in markets and currencies across Asia.

Stock markets across Asia that opened for the first time in 2016 witnessed sharp falls after China’s manufacturing sector reported contraction.

The contraction of manufacturing sector in China was reported in the Nikkei Asian Review index which was brought by Japan’s publications giant – Nikkei.

The worst trend happened in China where stock trading has stopped after leading indices – the Shanghai composite and the Shenzhen Composite fell by around 7% on Monday morning.

The stock market reaction came after the official manufacturing index of China – Purchasing Managers Index (PMI) reported a decline indicating contraction of manufacturing activities for the month of December, according to Nikkei.

Markets across Asia fell starting from Japan. In India, the Sensex and Nifty are trading low. Many Asian currencies also shivered under the new data about manufacturing decline that may translate into a real economy slow down soon.

The rupee lost nearly 18 paise against Dollar intraday and the Chinese Yuan has reached the five year low against the US Dollar on early Monday. Many other Asian currencies suffered depreciation after the reporting of poor Chinese manufacturing performance.

In India, the decline in the manufacturing activity occurred after a gap of two years and the Japanese firm identified Chennai floods as a main reason for creating a contraction trend.

The tension between Saudi Arabia and Iran has also started to create negative economic shocks. Oil has recovered notably in early Monday morning. According to the experts, the heated exchange between the two gulf powers will help oil to recover from the present lows in the medium term.


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