The price of Brent crude, the global benchmark, had risen more than 2% on Friday after China sought to boost the yuan, and its stock exchanges abandoned a new “circuit breaker” mechanism that had been blamed for much of the stock market havoc.
Advertisement
China’s Shanghai Composite Index closed up 61.41 points or 1.97 percent at 3,186.41 after falling as much as 1.9 percent and climbing 3.3 percent in early trade. “Unfortunately, this sends signals that at least in area of the stock market, policymakers are making big mistakes and are going back and forth and have kind of lost the game on policy, ” said Kuijs.
The U.S. dollar fell against the Taiwan dollar Friday, shedding NT$0.029 to close at the day’s high of NT$33.501 after an increase in the Chinese yuan’s reference rate sparked buying in regional currencies, dealers said.
The losses amounted to “more than the estimated United States student loan debt and 12% of the U.S. debt”, notedHoward Silverblatt, senior index analyst at S&P Dow Jones indices.
Thursday’s drop pushed the tech-heavy Nasdaq composite index into what market watchers call a correction, or a drop of 10 percent from a recent peak.
Asian shares rebounded on Friday, led by strong gains for battered Chinese stocks after China suspended its market circuit breaker and set a firmer midpoint rate for trading of the yuan for the first time in nine days.
Panic selling in Asia prompted by developments in China spread across the globe and threw the Toronto stock market into a tailspin Thursday, capping off seven consecutive days of losses and thrusting the index into bear market territory.
Nevertheless, “as we come to the end of the week European equity markets look on course to post some of the worst weekly losses since the previous China induced volatility, seen last August”, said Michael Hewson, chief market analyst at CMC Markets UK. At one point it was down 442 points. Japan’s Economy Minister Akira Amari reportedly said that continued oil price falls are not good for the world economy, but would help improve Japan’s term of trade.
The government s attempts to appease the nation s army of retail investors comes just a month ahead of the Chinese New year celebrations, a time when hundreds of millions of people travel for traditional family gatherings. Dominion Resources rose $1.24, or 1.8 percent, to $69.75.
“A turbulent start to 2016 has seen investors adopting the brace position, as a combination of factors have driven global markets lower”, Richard Hunter, Head of Equities, Hargreaves Lansdown Stockbrokers, said in a note. Financial stocks also slumped.
Advertisement
Other regional currencies followed the yuan down as markets began to worry about competitive currency devaluations from trading partners. Nordstrom gave up $1.70, or 3.5 percent, to $46.80 and Kohl’s fell $2.71, or 5.3 percent, to $48.15. It gained roughly 1.7 per cent against the dollar and 1.5 per cent versus the euro. Economic reports were mixed, with retail sales rising 0.4 percent to a record-high level of $24.774 billion in November from a month earlier, while activity in construction activity contracted in December after four months of expansion. Now that growth is slowing, the challenges multiply and Beijing’s ham-fisted handling of its stock market turmoil this week is eroding the image of China’s Communist Party leaders as a skilled managers. Those worries about China have drowned out signs that the economies of the USA and Europe are doing fairly well.
