A woman reacts near a display board showing the plunge in the Shanghai Composite Index at a brokerage in Beijing, China, Thursday, Jan. 7, 2016.
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China accelerated the depreciation of the yuan on Thursday, sending currencies across the region reeling and domestic stock markets tumbling, as investors feared the Asian giant was kicking off a trade war against its competitors.
Trading on Chinese stock markets was halted for the day on Thursday just 30 minutes after the start of trading. Policy makers went to extreme lengths to support shares in the midst of a $US5 trillion rout last summer, including ordering stock purchases by state funds, suspending initial public offerings and allowing trading halts that froze hundreds of mainland-listed shares.
Chinese stock investors play cards in a brokerage house in Beijing, Friday, Jan. 8, 2016.
Chinese stock trading was also suspended on Monday after the market plunged.
China has suspended new stock market rules after only four days because they were fueling sharp trading losses – rather than taming them.
Investors also had to digest further falls in the oil price and renewed concerns over global growth, with the World Bank lowering its forecast for this year from 3.3 per cent to 2.9 per cent.
Hours before the US markets opened, stock futures for the Dow Jones index were sharply down, by more than 380 points.
Aerospace company Boeing fell $5.82, or 4.2 percent, to $133.01 and railroad operator Union Pacific felt $1.75, or 2.3 percent, to $73.08.
Chinese authorities lowered the yuan’s central rate against the USA dollar by 0.51 percent to 6.5646, the lowest since March 2011.
89 points. The smaller Shenzhen index lost 8.35 per cent to close at 10745.47 points. The Nasdaq composite rose 19 points, or 0.4 percent, to 4,708.
Other energy prices besides oil also slipped. Ensco dropped 5 percent. But this was the best week for the metal since the market plunge in mid-August, a sign some investors still buy gold it in times of market upheaval. Brent crude, the benchmark for global oils, lost 48 cents, reaching $33.75 a barrel in London.
“It’s probably inevitable that China’s exchange rate needed to fall to reflect its slowing economy”. Macy’s lost 63 cents, or 1.7 percent, to $36.26. The Labor Department reported that the US economy added 292,000 jobs in December, suggesting that the USA economy is so far defying global trends and growing at a solid pace. Apple, the world’s largest publicly traded company, dipped 3.5 percent and touched its lowest price since September 2014. Some other Asian currencies retreated in concert with the yuan.
Earlier this week, economic data caused investors to worry about a slowdown in China’s manufacturing and service industries.
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Major stock indexes in Asia including the Shanghai Composite made slight gains Friday but major indexes in Europe slipped into the red after beginning the day marginally positive. The yield on the 10-year Treasury note fell to 2.17 percent from 2.24 percent. The dollar fell to 118.38 yen from 118.97 yen late Tuesday. The euro was up 0.4 per cent at $1.0824 with the dollar on the back foot.
