China’s main stock indexes, however, reversed direction early in the afternoon session, pulling the Shanghai Composite Index up 0.8 per cent on the previous day, while the CSI300 index was up 1 per cent. Chinese stocks also breached their August 26 close, the summer stock trough, before recovering in later trading. The Russell 2000 Index of smaller shares slipped 3.3 percent, bringing its drop from a peak reached in June to 22 percent. Japan’s Nikkei 225 stock index jumped 2.9 percent to 17,715.63 and Hong Kong’s Hang Seng was up 1.1 percent to 19,934.88.
Advertisement
“On the FX side, the dollar was better bid against commodity currencies”.
NOT GOOD ENOUGH: Alcoa slid 4.9 percent after the aluminum manufacturer’s latest quarterly results included revenue that fell short of Wall Street’s expectations. A selloff in the USA, lately an example of economic recovery, has exposed its vulnerability to volatility overseas.
“The circuit breaker was the most memorable blunder yet”, said Hao Hong, managing director at Bank of Communications in Hong Kong. However, much like a house of cards, something that took the whole day to build has been blown down in the space of five minutes.
Midday Thursday, major stakeholders of around 28 companies on the ChiNext, China’s Nasdaq-like start up board, issued statements saying that their shareholders wouldn’t sell shares for at least six months.
THE QUOTE: “Asia markets are starting to sense that a short-term upside move could be on the cards”, Chris Weston of IG said in a commentary. Many investors utilized this opportunity by buying low and selling high, in both spot and derivative markets.
Whether it was them, or actual non-government sponsored investors, will surely be debated.
Investors “don’t really understand what the government is doing”, said Steven Leung, head of institutional sales at UOB Kay Hian. The appreciating yuan also contributed in tightening market’s liquidity.
The weakness in onshore traded yuan was replicated in offshore markets with USD/CNH hitting a session high of 6.6128.
European stock markets pushed higher on Wednesday, on the back of bright Chinese economic data and a modest recovery in oil prices, dealers said.
The currency was traded at around 6.57 to the dollar here Wednesday, on a par with Tuesday’s rate as well as that in the onshore Shanghai yuan market.
The bank maintains that there will be modest depreciation of around 5% this year for the Chinese currency, with the USD/CNY trading at 6.8 at the end of this year.
U.S. markets tumbled overnight followed by a region-wide slump as investors switched out of shares for safer assets amid the continuing plunge in oil prices. The stock dropped 39 cents to $7.61. The Australian dollar, Korean won and Malaysian ringgit each fell around 0.4%. US stocks are opening higher, led by gains in big technology companies, which have had a rough start to the year.
Advertisement
China’s offshore yuan firmed above the onshore rate on Tuesday morning for the first time since October, as traders pointed to state intervention and rate arbitrage strategies for pushing the currencies abruptly together.
