Updated on December 7 at 4:39 p.m. ET
Chinese stocks plunged 7 percent Thursday, closing markets 29 minutes after trading began, and raising more fears about the health of what by some measures is the world’s largest economy. Consequently, markets across Asia and Europe slid, and U.S. stocks, which have already seen their worst three-day opening since the recession in 2008, extended that losing streak.
Thursday’s selloff in China was attributed to a decision by the People’s Bank of China, the country’s central bank, to set the midpoint rate on yuan at 6.5646 per dollar, or 0.5 weaker—that’s the lowest level since March 2011, Reuters reported.
“The Chinese yuan is smack bang at the heart of concerns,” Chris Weston, chief market strategist in Melbourne at IG Ltd, told Bloomberg. “For risk assets to stabilize and sentiment to turn around, we are going to need a stable or even positive move in the Chinese currency. It’s clear that the market is becoming increasingly concerned by the global inflation outlook.”
The Chinese central bank’s move increased already-heightened fears over the health of the Chinese economy. Although the country is expected to grow 6.5 percent this year—enviable by most other standards—much economic data coming out of the China is pessimistic. The decision in currency markets could indicate, analysts say, that the economy is doing worse than expected. A cheaper yuan, in theory, would boost Chinese exporters, who have been struggling.