Chinese share markets were choppy in response to the news that Chinese authorities had weakened the Yuan. The CSI300 index was down 0.3 percent, while Shanghai stocks slipped 0.2 percent after scoring hefty gains on Monday. MSCI’s broadest index of Asia-Pacific shares outside Japan lost its early gains to drop by 0.7 percent. Japan’s Nikkei 225 slipped 0.2% to 20,720.75.
China’s Central Bank devalued the Yuan early this morning after a series of poor economic data; the Yuan consequently dropped to a three-year low against USD. The Central Bank described its actions as a “one-off depreciation” of nearly 2 percent, based on a new way of managing the exchange rate that better reflected market forces, but economists said the timing suggested it was also aimed at helping exporters. The PBOC weakened the midpoint of the currency to 6.2298 per US dollar this morning, compared with Monday’s 6.1162 fix – the biggest-ever one-day adjustment to the midpoint. Data released over weekend showed that China’s exports fell 8.3% in July, hit by weaker demand from three huge trading partners – Europe, the United States and Japan.
The Australian Dollar lost 1 percent to $0.7338, giving up earlier gains made on a rebound in commodity prices. The Aussie Dollar is often used as a liquid proxy of China trades. The U.S. Dollar gained amid the Yuan’s slide, the Euro was also pushed lower although it drew on underlying support, with optimism regarding Greece sealing a multibillion-Euro bailout deal with its lenders. The Euro was down 0.4 percent at $1.0977 EUR after touching a 10-day high of $1.1041 EUR overnight.
In commodity markets, the shift in Beijing’s currency policy could be seen as a negative in the near term as a lower Yuan makes resources more expensive to Chinese buyers. Three-month copper futures were off 1 percent, and gold retreated to $1,098.80 an ounce. Oil also eased back from Monday’s highs. Brent crude was 27 cents lower at $50.15 a barrel, while U.S. crude fell a further 29 cents to $44.67. Oil prices, which have heavily influenced commodity currencies like the Canadian Dollar, resumed their fall on Tuesday. A weaker Chinese currency may support the country’s exports but it is also seen as weakening its ability to import commodities like oil.
Over in the UK equity markets mining stocks took a hit on the back of the PBOCs surprise move to devalue the currency, making it potentially more expensive to buy commodities. The miners are down between 1.9% and 4.0%. Ladbrokes, the British bookmaker that agreed to buy Gala Coral last month, posted a 44 percent drop in adjusted first-half profit to 24.7 million pounds, reflecting lower betting on football and a string of customer-friendly results. The shares are currently trading at 110.22 +0.23.
Chinese share markets were choppy in response to the news that Chinese authorities had weakened the Yuan. The CSI300 index was down 0.3 percent, while Shanghai stocks slipped 0.2 percent after scoring hefty gains on Monday. MSCI’s broadest index of Asia-Pacific shares outside Japan lost its early gains to drop by 0.7 percent. Japan’s Nikkei 225 slipped 0.2% to 20,720.75.
China’s Central Bank devalued the Yuan early this morning after a series of poor economic data; the Yuan consequently dropped to a three-year low against USD. The Central Bank described its actions as a “one-off depreciation” of nearly 2 percent, based on a new way of managing the exchange rate that better reflected market forces, but economists said the timing suggested it was also aimed at helping exporters. The PBOC weakened the midpoint of the currency to 6.2298 per US dollar this morning, compared with Monday’s 6.1162 fix – the biggest-ever one-day adjustment to the midpoint. Data released over weekend showed that China’s exports fell 8.3% in July, hit by weaker demand from three huge trading partners – Europe, the United States and Japan.
The Australian Dollar lost 1 percent to $0.7338, giving up earlier gains made on a rebound in commodity prices. The Aussie Dollar is often used as a liquid proxy of China trades. The U.S. Dollar gained amid the Yuan’s slide, the Euro was also pushed lower although it drew on underlying support, with optimism regarding Greece sealing a multibillion-Euro bailout deal with its lenders. The Euro was down 0.4 percent at $1.0977 EUR after touching a 10-day high of $1.1041 EUR overnight.
In commodity markets, the shift in Beijing’s currency policy could be seen as a negative in the near term as a lower Yuan makes resources more expensive to Chinese buyers. Three-month copper futures were off 1 percent, and gold retreated to $1,098.80 an ounce. Oil also eased back from Monday’s highs. Brent crude was 27 cents lower at $50.15 a barrel, while U.S. crude fell a further 29 cents to $44.67. Oil prices, which have heavily influenced commodity currencies like the Canadian Dollar, resumed their fall on Tuesday. A weaker Chinese currency may support the country’s exports but it is also seen as weakening its ability to import commodities like oil.
Over in the UK equity markets mining stocks took a hit on the back of the PBOCs surprise move to devalue the currency, making it potentially more expensive to buy commodities. The miners are down between 1.9% and 4.0%.
Ladbrokes, the British bookmaker that agreed to buy Gala Coral last month, posted a 44 percent drop in adjusted first-half profit to 24.7 million pounds, reflecting lower betting on football and a string of customer-friendly results. The shares are currently trading at 110.22 +0.23.
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