Shares in Asia were still on track for their biggest weekly fall in more than four months, but Friday’s advances seemed to reduce some of the fears that have hit global markets.
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China’s regulatory body, the China Securities Regulatory Commission (CSRC), on Thursday suspended the recently implemented circuit breakers, a regulatory tool created to limit how far stocks can fall after the market shut down for a second time this week.
Despite the extension of selling restrictions on large shareholders that own 5 percent of more of a listed company’s stock in China, the 46-nation MSC world stock Index fell by 2.5 percent and oil plunged by 5 percent to $33 a barrel as the crisis spread.
The gains pared losses for the week for both indexes to less than 10 percent.
It set the rate CNY=SAEC at 6.5636 per dollar prior to market open, firmer than both the previous fix and Thursday’s closing quote. The spot market opened at 6.5700 per dollar, and was trading at 6.5887 at 0313 GMT.
On Thursday, it reportedly had intervened to defend the yuan in offshore trade, reversing a decline of more than 1 per cent that took it to a record low of 6.7600 per dollar.
The PBOC’s Friday setting is “a signal it does not intend to keep allowing the yuan to fall”, said Yoshinori Shigemi, global market strategist at JPMorgan Asset Management.
Japan’s Nikkei 225 was flat in late afternoon trade before slipping to close down 69.38 points, or 0.39 percent, at 17,697.96.
Korea’s exports to Japan and the United States declined 13.1 percent and 4.7 percent last month as well, respectively.
After a 10 percent-plus drop in Chinese equities, an equally dramatic slump in oil and major volatility in other markets, a 2 percent rise by Chinese.CSI300 shares ensured Asia end higher for the first time in 2016.
Taiwan’s central bank entered the market, as it has done nearly every session recently, to prop up the USA dollar and slow down the pace of the Taiwan dollar’s appreciation in an attempt to protect the country’s exports, they said.
The median projection from Fed policy makers in December called for four quarter-point interest-rate increases this year, provided the US economy continues to expand amid sustained job market progress and inflation picks up gradually toward the Fed’s 2 percent goal.
After the US market close, two Apple suppliers added to growing worries about slowing shipments of iPhone 6S and 6S Plus by cutting their revenue estimates for the third quarter.
It was little changed at 94.19 Australian cents from 94.16 cents on Thursday and was lower at 61.07 euro cents from 61.35 cents. Europe followed suit, with the FTSE, DAX and CAC40 up 0.5 to 0.7 per cent. It gained 0.4 per cent overnight to be valued at 119 to the USA dollar.
With risk appetite severely hurt, investors are flocking to low-risk assets such as bonds, gold and traditional safe-haven currencies.
The depreciation of the yuan earlier in the week is what in part caused sentiment to sour amongst investors, and the higher value of the currency this Friday, is what’s brought back some sanity back to Chinese shares.
The yen stood near Thursday’s 4 1/2-month high of 117.33 yen, last trading at 117.64 yen.
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Energy and materials sectors were in positive territory, with Rio Tinto up 1 percent, Woodside Petroleum up 2.3 percent, and Santos up 0.46 percent.
