“European equity markets are trading higher… on the back of better than expected Chinese trade data”, said analyst Markus Huber at traders City of London Markets.
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The ChiNext Index, the NASDAQ-style board of growth enterprises, lost 2.86 percent to close at 2,112.9 points.
Shanghai – Chinese stocks and the yuan slipped on Thursday, despite the efforts of the authorities, as the gloom enveloping global markets overwhelmed signs that China’s economy is not weakening as fast as some investors had feared. But those gains unravelled later in the global session, and major USA stock indexes finished with sharp losses. China’s Shanghai Composite Index was down 1 percent to 2,979.08.
In addition, the world’s second largest economy has also cast a shadow on African currencies that are heavily dependent upon exports in commodities.
The People’s Bank of China fixed the yuan at 6.5630 to the dollar on Wednesday, marking the fourth day that the central bank has kept its yuan guidance roughly stable. Oil rose for the first time in 2016, while the offshore yuan strengthened. Benchmark U.S. crude fell $1.09 to $30.11 per barrel in NY.
Also, while the yuan has softened considerably against the dollar, it hasn’t weakened as much against other currencies in trade-weighted terms.
Exports rose by 2.3pc in yuan terms in December, compared with the same month a year earlier. Traders said the mood on many markets was still shaky after an extremely volatile start to 2016, driven by worries over conflict in the Middle East, China’s finances and the fallout from low oil prices. The panic seen in financial markets last week has receded since Chinese policy makers intervened to halt the yuan’s drop to a five-year low, reducing the risk of a currency war.
Analysts said the weaker Yuan is helping to boost export revenues.
China’s total social financing – the broadest measure of credit in the economy – was 1.82 trillion yuan in December, the central bank said, higher than 1.02 trillion yuan in November and above the median forecast of 1.15 trillion yuan according to a Bloomberg News survey. The index has lost around 18 percent since the start of this year.
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That squeeze had narrowed the gap with the onshore market, although on Friday the offshore yuan was jolted weaker, and about 1.1% below the onshore spot at 6.6617 to the dollar. China’s trade improved in December, U.S. job creation has remained strong, and Australia, which is one of the countries highly vulnerable to China’s slowdown, reported another month of strong job growth in December. The yuan fell 1.5 percent last month, the most since August, when a surprise devaluation was announced.
