{"id":76715,"date":"2015-08-12T02:30:52","date_gmt":"2015-08-12T06:30:52","guid":{"rendered":"http:\/\/countingpips.com\/?p=76715"},"modified":"2015-08-12T08:03:54","modified_gmt":"2015-08-12T12:03:54","slug":"markets-roiled-again-by-chinese-devaulation","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2015\/08\/markets-roiled-again-by-chinese-devaulation\/","title":{"rendered":"Markets roiled again by Chinese devaulation"},"content":{"rendered":"
August 12, 2015<\/div>
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Article by ForexTime<\/a><\/p>\n

Asian stocks and emerging market currencies tumbled on Wednesday and commodities fell after China let the yuan fall sharply for a second straight day, forcing investors to seek refuge in safe-haven government debt.<\/p>\n

Financial spreadbetters expect Britain\u2019s FTSE 100 to open 0.6 percent lower, Germany\u2019s DAX to start 0.9 percent lower. France\u2019s CAC 40 was seen falling 0.6 percent at the open.
\nOn Wednesday, the People\u2019s Bank of China set the yuan\u2019s midpoint rate weaker than Tuesday\u2019s closing market rate, which had already fallen sharply after China devalued its currency by nearly 2 percent in a surprise move.<\/p>\n

The yuan fell further after Beijing released July output and investment data. The currency yuan, which was at 6.4275 to the dollar, weakened further to 6.4398 at 0545 GMT.
\nThe central bank had billed Tuesday\u2019s change as a free-market reform but experts suspect it could be the beginning of a longer-term slide in the exchange rate aimed at making China\u2019s ailing exports more competitive.<\/p>\n

The rapid drop in the value of China\u2019s currency \u2013 around 4 percent in the last two days \u2013 dealt a body blow to appetite for risky assets globally, with equities, currencies and commodities coming under selling pressure as money managers feared it could ignite a currency war that would destabilise the global economy.<\/p>\n

MSCI\u2019s broadest index of Asia-Pacific shares outside Japan fell 2.1 percent to a two-year low. Stock markets from Australia to Singapore were a sea of red.<\/p>

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\u201cChina\u2019s currency moves will hurt appetite for risky assets such as equities and commodities,\u201d said Rajeev De Mello, head of Asian fixed income at Schroders in Singapore, which manages $10 billion in Asia.<\/p>\n

\u201cWhile it is too early to say whether this is the beginning of a sustained devaluation of the yuan, other central banks may be forced to follow suit and that may trigger a fresh round of currency weakening around the emerging world.\u201d<\/p>\n

On Wall Street, the Dow fell 1.2 percent and the S&P 500 shed 1 percent as China\u2019s currency move added to worries about the global economic outlook and hit companies with large exposure to the country.<\/p>\n

Many Western firms have already been reporting slowing sales in China as its economy cools and shares of companies from German auto makers to luxury good makers are expected to come under pressure.<\/p>\n

Emerging market currencies from Indonesia to Brazil reeled as investors feared central banks around the world could rush to weaken their own currencies in response to China\u2019s move.<\/p>\n

That meant only the greenback was left standing tall with the U.S. dollar holding near a two-month high of 125.17 yen while the broad dollar index was stuck within recent trading ranges.
\nCurrencies considered as China proxies were singled out for special punishment, with the Australian dollar nursing losses at 0.7250 per dollar after falling more than 1.5 percent overnight.<\/p>\n

\u201cThe bottom line is that we believe investors will orientate portfolios towards more rate cuts rather than currency weakness. Real rates are way too high, in our view,\u201d wrote Sean Darby, chief global equity strategist at Jeffries.<\/p>\n

Commodities investors worried that prolonged yuan weakness could revive deflationary pressures, with a 19-commodity Thomson Reuters\/Core Commodity CRB Index holding near lows not seen since 2003.
\nU.S. crude oil futures extended their decline with prices at their lowest since March 2009.<\/p>\n

Copper and aluminium also hit six-year lows on Tuesday as the cheaper yuan fueled worries the world\u2019s top metals consumer would cut back on imports.<\/p>\n

Copper posted a modest bounce after the overnight slide, with three-month copper on the London Metal Exchange (LME) edging up 0.7 percent to $5,159 a tonne.<\/p>\n

Bonds were the solitary bright spot, with the the benchmark 10-year Treasury note yield holding near a three-month low of 2.09 percent hit overnight.
\nIts 10-year Japanese counterpart fell to fresh a three-month trough of 0.37 percent.<\/p>\n

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\"Forex-Time-Logo\"Article by ForexTime<\/a><\/span><\/strong><\/p>\n

ForexTime Ltd (FXTM)<\/strong> is an award winning international online forex broker regulated by CySEC 185\/12 www.forextime.com<\/a><\/p>\n

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Article by ForexTime Asian stocks and emerging market currencies tumbled on Wednesday and commodities fell after China let the yuan fall sharply for a second straight day, forcing investors to seek refuge in safe-haven government debt. Financial spreadbetters expect Britain\u2019s FTSE 100 to open 0.6 percent lower, Germany\u2019s DAX to start 0.9 percent lower. France\u2019s […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-76715","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/76715","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=76715"}],"version-history":[{"count":3,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/76715\/revisions"}],"predecessor-version":[{"id":76735,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/76715\/revisions\/76735"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=76715"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=76715"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=76715"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}