World stocks re­bound as Chi­nese yuan fall slows

The China Post - - BUSINESS INDEX & -

World stock mar­kets re­bounded Thurs­day as the fall in the Chi­nese yuan slowed and the coun­try’s cen­tral bank tried to dampen spec­u­la­tion of fur­ther de­val­u­a­tion.

Euro­pean stocks jumped in early trad­ing, with France’s CAC-40 ris­ing 1.8 per­cent to 5,013.59. Ger­many’s DAX gained 1.4 per­cent to 11,078.39 and Bri­tain’s FTSE 100 added 0.8 per­cent to 6,620.92. U.S. stocks were poised to open higher. Dow fu­tures were up 0.2 per­cent to 17,049.00 and broader S&P 500 fu­tures rose 0.2 per­cent to 2,089.30.

The Chi­nese cur­rency fell for a third day but by late af­ter­noon its de­cline was only 0.2 per­cent com­pared with drops of up to 1.9 per­cent on the pre­vi­ous days. It has dropped a to­tal of 2.9 per­cent since Tues­day. The sur­prise move ear­lier this week to loosen the mech­a­nism that con­trols the yuan and send the cur­rency lower re­ver­ber­ated through global mar­kets but the tur­moil is now abat­ing. Sen­ti­ment was soothed fur­ther by com­ments from the cen­tral bank. The of­fi­cial rea­son for let­ting the tightly con­trolled yuan fall is to make it more re­spon­sive to mar­ket forces but a weaker yuan also gives a com­pet­i­tive boost to ex­ports from China, where the econ­omy is slow­ing.

The Chi­nese cen­tral bank’s “opaque com­mu­ni­ca­tions pol­icy may well have led to panic over-selling ear­lier in the week,” mar­ket an­a­lyst An­gus Ni­chol­son of IG said in a com­men­tary. “The mar­kets have now di­gested the prospects of a CNY de­val­u­a­tion and are judg­ing it as not as big of a risk as ear­lier.”

Ma­jor Asian bench­marks fin­ished higher af­ter a two-day sell-off. Ja­pan’s Nikkei 225 rose 1 per­cent to 20,595.55 and South Korea’s Kospi gained 0.4 per­cent to 1,983.46. Hong Kong’s Hang Seng climbed 0.4 per­cent to 24,018.80 and the Shang­hai Com­pos­ite In- dex in main­land China added 1.8 per­cent to 3,954.56 af­ter briefly slip­ping into neg­a­tive ter­ri­tory. Aus­tralia’s S&P/ASX 200 ad­vanced 0.1 per­cent to 5,387.90. Welling­ton lost 0.34 per­cent, or 19.51 points, to 5,737.70. Manila dropped 0.74 per­cent, or 55.63 points, to 7,439.80.

In in­di­vid­ual shares, Len­ovo dropped 9.09 per­cent to HK$7.70 af­ter the world’s big­gest per­sonal com­puter maker said first-quar­ter net profit more than halved, and an­nounced it would cut around 3,200 staff.

Aus­tralia’s Tel­stra fell 2.24 per­cent to AU$6.10 af­ter the tele­coms com­pany said an­nual net profit dropped one per­cent to AU$4.23 bil­lion af­ter the sale of Hong Kong mo­bile busi­ness CSL.

Mo­bile car­rier Soft­Bank slumped 2.56 per­cent to 7,491 yen af­ter U.S.-listed In­ter­net gi­ant Alibaba, in which it holds a ma­jor stake, re­ported dis­ap­point­ing earn­ings.

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