Economy

China markets swing wildly on growth, trade uncertainty

China markets swing wildly on growth, trade uncertainty

Are we heading for a full-blown trade war?

It is highly unlikely that China is using yuan depreciation as a tool in trade negotiations with the United States, said Tai Hui, chief market strategist of J.P. Morgan Asset Management (Asia Pacific).

The Hang Seng then edged back to end 1.4 percent lower.

The European stock futures point to gains of 0.3 percent in France's CAC and Britain's FTSE and 0.5 percent in Germany's DAX.

In early trade on Tuesday, yuan weakened to a low of 6.7204 against the dollar, the lowest since August 7, 2017.

China's yuan rose sharply against the dollar on Wednesday and stocks flip-flopped a day after the People's Bank of China governor assured markets the central bank would keep the currency stable.

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"I detected increasing alarm over trade tensions and a lot of nervousness about a full blown trade war, which comes at a bad time for China where the economy is undergoing a downdraft at the same time the United States is seeing a sharp upturn", said Aninda Mitra, Singapore-based senior sovereign analyst at BNY Mellon Investment Management, who visited Shanghai last week.

China's state-owned banks have reportedly been buying U.S. dollars in forwards on behalf of the central bank (PBOC) and immediately selling them into the spot market to support the yuan.

Chinese currency and equity markets have been on edge ahead of Friday, when USA tariffs on US$34 billion (S$46.5 billion) worth of Chinese goods kick in.

The mood was more cheerful in Europe where a pan-European equity index rose 1 percent, the euro firmed and bond yields climbed after German Chancellor Angela Merkel struck a migration deal with her Bavarian conservative coalition partners.

The Hong Kong stock market on Tuesday wrote a finish to the two-day winning streak in which it had advanced nearly 600 points or 2.1 percent.

The benchmark share index in Shanghai, which entered a bear market last week, is trading near its lowest level in more than two years.

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Traders said statements from the PBOC officials went some way towards calming the market.

Also on Monday, Washington moved to block China Mobile from offering services to the USA telecommunications market, recommending its application be rejected because the government-owned firm posed national security risks.

"Both the euro and the dollar benefit because both are seen as safe havens".

RBA Governor Philip Lowe said "one uncertainty regarding the global outlook stems from the direction of worldwide trade policy in the United States", cautioning that the recent U.S.

On the back of the force majeure in Libya and the supply outages in Canada the markets are staggering tight over the short run, and despite suggestions of more supplies coming to market, traders continue to buy dips as increased barrels may only act to prevent a more rapid increase in prices given the global economies insatiable demand for oil.

The ChiNext Index, China's NASDAQ-style board of growth enterprises, was up 1.18 percent to close at 1,607.12 points Tuesday. USA crude fell 1.5 percent to $73.03 per barrel and Brent was last at $77.71, down 0.68 percent.

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