Photographer: Tomohiro Ohsumi/Bloomberg

Charting the Markets: New Week, Little Stock Relief

Japanese stocks flirt with bear market, the yen drops, and Brent continues its descent.

The 2016 global stock sell-off, the worst-ever start to a year, has entered its third week. The MSCI All-Country World Index has sunk 9 percent in 11 trading sessions and is heading for its lowest close since Aug. 2013. Asian stocks have slumped to a Sept. 2012 low as crude oil continues to drop. It was another volatile trading session in China with the Shanghai Composite Index closing 0.44 percent higher after entering a bear market on Friday.

The Stoxx Europe 600 Index fell after rising as much as 1.2 percent at the open. U.S. markets are closed Monday for a public holiday.

Japan's Nikkei 225 Index is now 19 percent below the high reached in June 2015. Earlier in Monday's session the gauge briefly entered a bear market when it sunk as much as 2.8 percent. It pared more than half of those losses by the close, registering a decline of 1.1 percent. It's the worst start to a year for Japanese stocks, with the Nikkei slumping 11 percent to its lowest since Sept. 2015. The Topix has plunged 10 percent. Almost two-thirds of the time since 1966, the direction the Topix index took in the first 10 days of the year was unchanged by year-end, according to Bloomberg data.

Brent crude fell as much as 4.4 percent to $27.67, its lowest since Nov. 2003, after international sanctions on Iran were lifted. The move paves the way for increased exports from the OPEC producer, intensifying the global oil glut. Amir Hossein, the country's deputy oil minister for commerce and international affairs, says Iran wants to raise shipments by 500,000 barrels a day. Analysts aren't so bullish. They say the Persian Gulf nation will only be able to increase oil production by 100,000 barrels a days a month after sanctions are lifted and by 400,000 in six months. Hedge funds have never been so bearish on West Texas Intermediate, which has slumped 24 percent in 2016.

The world's favorite currency in 2016 has lost some of its appeal after China stepped up efforts to stabilize the onshore and offshore yuan. The People's Bank of China strengthened the yuan fixing by the most in almost a month. It also announced it'll impose reserve-requirement ratios on yuan deposited onshore by overseas financial institutions form Jan. 25, to try to curb bearish bets on the yuan traded in Hong Kong. Premier Li Keqiang on Friday pledged a "stable" exchange rate and said the nation has no intention of stimulating exports through competitive currency devaluation. Bullish bets on the yen have risen to the highest level in three years. The yen has gained 2.5 percent against the U.S. dollar in 2016 after dropping for four consecutive years.

Mark Barton is a presenter on Bloomberg TV. Follow him on Twitter @markbartontv

Before it's here, it's on the Bloomberg Terminal. LEARN MORE