China’s stock markets have closed early today after shares took a sudden and sharp fall. On the first day of trading of 2016, trading was halted 90 minutes earlier than scheduled.

The Shanghai Composite Index hit a three-month low, falling by 6.9%. The Shenzhen Composite fell by more than 8%.

Today’s sudden plunge in stocks set off a “circuit breaker” system for the first time, which immediately halts trading when activated. The system is aimed at checking volatility in the Chinese stock market.

According to the BBC’s Karishma Vaswani, today’s performance hints at "volatile trading for the rest of the year [in China]".

"Retail investors in the Chinese stock market are often driven by sentiment and tend to follow the crowd. When they hear of some bad news from brokers or their friends, and other people start selling - they start selling too", Ms. Vaswani continues.

Financial analysts believe that reports of a contraction in China’s factory activity may have been one of the factors triggering investors’ sudden change in expectations.

In reaction to Shanghai and Shenzhen’s sudden suspension, the London’s FTSE 100 had fallen by 2% only minutes after opening.

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