But China may have realised this week that trying to control its currency and stock markets may end up doing more harm than good. Apple, the world’s largest publicly traded company, dipped 1 percent and touched its lowest price since October 2014.
Advertisement
Emerging-market stocks trimmed the worst weekly drop since 2012 and currencies rose after China suspended a controversial circuit-breaker system that sparked a selloff in mainland shares and moved to stabilise the yuan. Trading was automatically suspended as a result. That set off another slump in Asian and European stocks. The Standard & Poor’s 500 index lost 44 points, or 2.2 percent, to 1,946.
Equity indexes in emerging Europe rallied, with Hungarian and Czech stocks adding at least 1.4 per cent. The Borsa Istanbul 100 Index climbed 0.7 per cent in its fourth day of gains.
After reaching a 12-year low the previous session, Brent crude rose 53 cents to $34.28 a barrel by 0930 GMT (3:00 p.m.in India), from an intraday high of $34.72.
China has pledged to make the value of the yuan more flexible and market-oriented, and the International Monetary Fund has announced the unit will join its elite reserve currency basket.
Financial and technology stocks also struggled.
“China’s been such a big driver of global growth for 15 years and now they’re not, and they don’t seem to have a plan for the next 15 years”, Canally said.
China stocks rose across the board, with the resources sector surging more than 6 percent and energy shares jumping over 4 percent. Recent economic reports have also shown continued weakness in China’s manufacturing and service industries.
Chinese stock trading halted for the day Thursday after a key index, the CSI 300, plunged 7 percent, tripping a “circuit breaker” that is meant to dampen volatility. The effect was a rush to sell before a second trigger halted the day’s trade permanently.
Europe’s main indices closed with losses of about 2.0% Thursday as signs of a dramatic slowdown in powerhouse China put fright into investors about the outlook for the world economy. “Companies will remain cautious in their outlook when they present Oct – Dec 2015 earnings”, said Hannah Cunliffe, senior portfolio manager at Union Investment in Frankfurt. Analysts said the market was likely being supported by buying from Chinese government entities that have been dubbed the “National Team”.
“And the initial suspension of trading, combined with sentiment that was already brittle due to worries about the economy and this week’s falls in the yuan, just panicked investors”. “I don’t think that’s the case on this one”, said Yardeni. E-commerce giant Amazon rose $10.90, or 1.8 percent, to $618.14. It’s down 3.1 per cent this year. The price of copper declined 6.6 cents, or 3.2 percent, to $2.022 a pound. That helped send copper producer Freeport-McMoRan down 64 cents, or 10.5 percent, to $5.53.
Most of the blame goes to China, which is believed to be the biggest threat to USA stocks this year.
Advertisement
After its sharply lower fix on Thursday, the PBOC had later sown confusion by reportedly intervening heavily 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. Japan’s Nikkei 225 lost 0.4 percent.
