US open: Dow Jones plunges 240 points on China regulatory news

US stocks slid on Friday, after Chinese regulators said they will allow fund managers to lend stocks for short selling.

Just after 15:00 BST, the Dow Jones Industrial Average was down 240 points, while the S&P 500 and the Nasdaq lost 19 and 51 points respectively.

Futures on the Chinese indices were down more than 5% in pre-open trading at 12:20 BST, with US stock futures and European equities also suffering.

“What we’re seeing right now is a combination of panic and technical levels being wiped out and exacerbating the move lower,” said Oanda’s senior market analyst Craig Erlam.

The US consumer price index (CPI) slipped by 0.1% year-on-year in March, dragged down by lower electricity and gas price, though it registered a 0.2% increase from the previous month.

Economists had been calling for increases of 0.3% month-on-month and 0.1% year-on-year.

Figures released by the US Bureau of Labor Statistics showed the core rate of inflation, which strips out the oft-volatile food and energy categories, rose by 0.2%.

Analysts said the latest CPI figures showed that the stronger dollar is doing little to support prices.

“What is puzzling is that core commodities prices have been rising for the past two months, suggesting that the stronger dollar is not helping,” said Capital Economics’ chief US economist Paul Ashworth.

The University of Michigan consumer sentiment survey for April is scheduled for release at 14:55 BST.

In company news, the earnings season continues with General Electric set to report after the opening bell, while Reynolds American and Honeywell International are also due to publish results on Friday.

American Express slid 3.46%, after saying late on Thursday that its results were hurt by strong currency headwinds.

Advanced Micro Devices plunged 10% after its first half loss was wider than estimated, while Mattel rallied 6.4% after the toy-maker posted a smaller-than-expected first quarter loss on Thursday.

Schlumberger gained 1.8% as the oil field services group announced it would slash a further 11,000 jobs following a 39% decline in first quarter earnings.

Oil prices edged lower, with West Texas Intermediate losing 0.9% to $56.19 a barrel, while Brent crude shed 0.2% to $63.84

The dollar declined 0.4% and 0.1% against the pound and the euro but was unchanged against the yen while gold futures climbed 0.42% to $1,202.90.