Another drop in China’s currency shook markets around the world for a second straight day amid rising concerns about the world’s second-largest economy. Google gained after the company announced a restructuring.
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The Standard & Poor’s 500 index was down a point at 2,084 as of 9:35 a.m. Eastern time. The future for the Dow Jones industrial average fell 0.3 per cent to 17,502.00.
CHINA’S DEVALUATION: Beijing’s move to weaken its currency allowed the yuan to fall by its biggest one-day margin in a decade.
China’s government said its moves were attempts to make the country’s exchange rate more responsive to the market. But a cheaper yuan also benefits China by making exports less expensive to overseas customers. Exports fell by an unexpectedly large 8.3 percent in July.
The Obama administration has had 13 opportunities to identify China as a currency manipulator in its semi-annual Reports to Congress on global Currency and Exchange Rate Policies, but has never done so, according to Mr. Lorenz.
Another major reason why the recent stock market free fall had a limited impact on the broader Chinese economy is that the portion of the population that was also directly affected is relatively small. Investors welcomed the increase in transparency that will give them a better idea of how the technology giant spends its cash. Brands, said Christopher Niemczewski, managing principal at Marshfield Associates, a Washington, DC firm with $2 billion under management that holds about 900,000 shares of the fast food restaurant company. The Australian dollar sank 1.3 percent to $0.7321. Fuel is one of the biggest expenses for airlines and lower fuel costs typically means higher profits for airlines. Alibaba dropped $3.96, or 5.1 percent, to $73.38. Southwest Airlines gained 95 cents, or 2.5 percent, to $38.75.
China wants to expand use of the yuan by having it included in the SDR, an global reserve asset that now comprises four currencies: the dollar, euro, pound and yen.
– Wholesale gasoline rose 7 cents to close at $1.764 a gallon. The yield on the 10-year Treasury note rose to 2.15 percent. Officials expect the deal to be finalized Tuesday. At least in the short term, China’s stock market seems to exist within the buffers of its own reality, kept at arm’s length from the other sectors of China’s financial matrix – from what is sometimes referred to as the “real economy”.
ACROSS THE POND: In Europe, Germany’s DAX climbed 1 percent and France’s CAC-40 surged 1.4 percent The FTSE 100 index of leading British shares was flat.
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ENERGY: Benchmark U.S. crude fell $1.89 to $43.07 per barrel on the New York Mercantile Exchange. At the height of the equities bull run, the year on year rise in retail sales had slumped to their lowest level in five years, “indicating how disconnected stocks and retail spending are”, Mark Tanner, the founder and managing director of China Skinny, a Shanghai based marketing, online, and research agency, explained.
