Yuan at lowest in a decade on fears of escalation in US trade war with China

Global bear market?

Asian shares rose in a choppy overnight session as China made a fresh attempt to stabilise its stock markets.

Beijing’s securities regulator said it would encourage share buybacks and mergers and acquisitions by listed firms and would enhance market liquidity.

Mainland China’s benchmark Shanghai Composite and the blue-chip CSI 300 gained to 1.0% and 1.1%, respectively, having fallen in early trading.

Japan’s Nikkei average also erased early losses and rose 1.5% as traders went shopping for bargains among beaten-down stocks.

MSCI’s broadest index of Asia-Pacific shares has lost 12% in October and is on track for its biggest October decline since 2008, during the global financial crisis.

“At this point, nobody can say the equity market is bottoming out. Global investor sentiment remains shaky,” said Yasuo Sakuma, chief investment officer at Libra Investments in Tokyo.

The speed with which a brief rally in US stocks faded on Monday underscored that jittery mood.

Wall Street was pointing to a modestly higher open later, but the S&P 500 will be starting near a six-month low, having dropped almost 10% from September’s record highs.

The chill around China and global trade means emerging- market stocks are at an 18-month low. MSCI’s index is down for a sixth day in a row and Monday’s post-election rally in Brazil was already in the rear-view mirror.

The CBOE Global Markets volatility index, known as Wall Street’s “fear gauge”, was down a touch, but it had jumped to as much as 27.86 points, its highest since October 11 and the second highest since the volatility shock of early February.

“The probability of global stocks turning to a bear market is increasing,” said Masanari Takada, cross-assets strategist at Nomura Securities.

In the main commodity markets, oil prices were mixed after easing overnight as Russia signalled that output will remain high and as concern over the global economy led to worries about demand for crude.

West Texas Intermediate crude futures edged up 0.1% to $67.13 per barrel. Brent crude futures dipped 0.3% to $77.13.

Zinc and copper prices also dropped, along with other base metals, after  Trump’s warning of new tariffs on Chinese goods.

Trump has said during an interview with Fox News that he thinks there will be “a great deal” with China on trade, but warned that he has billions of dollars worth of new tariffs ready to go if a deal is not possible. 

Reuters

Source: businesslive.co.za