World stocks rebound as Chinese yuan fall slows
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.