Interesting perspective from Zacks on the Chinese selloff:
We are told that Chinese manufacturing data ruined the first trading day of the New Year. That is patently false. Their numbers were in the same ballpark that they have been for several months.
So what caused their 7% stock decline?
As it turns out, this is just chickens coming home to roost on another gross manipulation of markets by the Chinese government. I am referring to the policies they put in place six months ago during the previous market collapse. One such ruling stopped large shareholders (5% ownership or more) from selling their positions in listed companies. That party ends this Friday and thus some Chinese investors are trying to get out ahead of the potential stampede.
History shows us that the Chinese stock market is pretty disconnected from the actual economy. So this is another "Boy Who Cried Wolf" event like we've had many times over the last several years. Meaning it is a temporary dip caused by unnecessary fear that is followed by a bounce in the market. That is likely why traders rushed in at the end of the US session to bid up stocks 1% into the close.