Copper prices fell 2.3 percent to 6-1/2-year lows as the Chinese stock declines reinforced worries about demand in the world’s biggest consumer of industrial metals.
Advertisement
“In this context, we expect yuan volatility to remain high, while depreciation pressures are likely to remain strong”.
Gain Capital analyst Fawad Razaqzada said he doesn’t see much hope for an immediate rebound in the oil price. Energy producers led declines among U.S. equities, which are mired in the worst start to a year on record.
U.S. payroll growth surged in December, capping the second-best year for American workers since 1999. “However, the weak mainland economy and [expectations of a hike in] United States interest rate would continue to drag the market down”, said Jeffrey Chan Lap-tak, founding partner of Oriental Patron Financial. “That’s what happens in market cycles… right now we people simply have searching for reasons to be negative”.
The S&P 500 was down 6.14 points, or 0.32 percent, at 1,915.89 and the Nasdaq Composite index was down 24.20 points, or 0.52 percent, at 4,619.43. Shanghai ended the week about 10 percent lower, in echoes of a sell-off that fuelled global turmoil in the summer. Investors typically sell the first rally after a big selloff, because it’s the first chance they can get out on an uptick.
Japan’s Topix index tumbled 3.1 percent in a sixth day of declines.
China’s central bank plans to keep the yuan basically stable against a basket of currencies, and fluctuations of the Chinese currency against the US dollar will increase, Chief Economist Ma Jun said on the central bank’s website late Monday (www.pbc.gov.cn).
In Shenzhen, Hebei Steel, down 2.2 percent to 3.54 yuan; Myhome, down 5.8 percent to 5.35 yuan and BOE Technology, up 0.4 percent to 2.76 yuan were among the most actively traded.
Last week, major stock exchanges in China witnessed one of their worst starts to a new year, with a near 10 per cent slump and two trading suspensions set off by a newly-minted “circuit breaker” mechanism which has since been scrapped. “After the fix jumped more than 1 per cent last week, the latest two readings have been much stronger than expected, and along with reports of stronger intervention, have helped calm sentiment somewhat”. Britain’s FTSE 100 climbed 0.2 percent to 5,885.63. Russian markets remained closed for holidays.
According to MSCI global indexes, BRIC (Brazil, Russia, India and China) and other emerging market indexes have bled the most so far this year with losses of 7.2% and 6.8% losses each.
Advertisement
The offshore yuan rose 0.04 percent to 6.5831 per dollar as at 9.17pm yesterday, while the onshore yuan in Shanghai fell 0.06 percent to 6.5750 per dollar. The move by the China Foreign Exchange Trade System, which is run by the central bank to facilitate interbank trading, sent the currency lower on speculation that policy makers want to reduce its link to the dollar and let it weaken further.. Wall Street was poised for a solid open with both Dow futures and the broader S&P 500 futures up 0.5 percent. Output, adjusted for seasonal swings and inflation, slid 0.3 percent from October, data from the Economy Ministry in Berlin showed. US crude CLc1 was quoted 71 cents lighter at $32.45.
