Asian markets were mixed in early trading Wednesday, after China’s central bank moved to ease fears of a full-blown currency war.
The People’s Bank of China early Wednesday set the daily reference point for the yuan at 6.9996 per dollar, a bit weaker than expected. The currency typically trades up to 2% higher or lower than that point. Trade tensions escalated Monday when the yuan passed 7 per U.S. dollar, crossing a “line in the sand” that sparked a global stock selloff and spurred the U.S. Treasury Department to label China a currency manipulator.
Stocks on Wall Street recovered Tuesday after suffering their worst day of the year on Monday. Market movements in Asia on Wednesday were significantly more muted than the previous two trading days.
fell 0.8%, and Hong Kong’s Hang Seng Index
retreated 0.7%. The Shanghai Composite
was down 0.2 while the smaller-cap Shenzhen Composite
gave up modest early gains and retreated 0.2%. South Korea’s Kospi
slipped 0.7%, while benchmark indexes in Taiwan
were mixed. Australia’s S&P/ASX 200
gained 0.3%, and New Zealand’s NZX 50
rose 0.9% after New Zealand’s central bank cut its benchmark interest rate by a half-percentage point to an all-time low of 1% as it forecast tougher economic conditions ahead.
Among individual stocks, Yahoo Japan
rose in Tokyo trading, while Honda Motor
and Japan Steel
fell. In Hong Kong, China Overseas Land & Investment
gained while China Life Insurance
and Sands China
retreated. LG Electronics
fell while SK Hynix
gained. Commonwealth Bank
and Beach Energy
declined in Australia.
The S&P 500 index
rose 37.03 points, or 1.3%, to 2,881.77. The index dropped 3% on Monday, its worst loss since December. The Dow Jones Industrial Average
climbed 311.78 points, or 1.2%, to 26,029.52. The Nasdaq composite
gained 107.23 points, or 1.4%, to 7,833.27.
Global investors have grown nervous lately about the possible impact that a trade war between the U.S. and China could have on the economy and corporate profits.
But China’s decision to allow its currency to stabilize Tuesday suggests Beijing might hold off from aggressively allowing the yuan to weaken as a way to respond to U.S. tariffs on Chinese goods.
“Markets have gone full circle again hoping for the best while preparing for the worst where even the tiniest gestures could see investors could respond more positively than warranted given how emotionally invested market participants are,” said Stephen Innes, managing partner at VM Markets in Singapore.
Benchmark crude oil
lost 12 cents to $53.51 a barrel. It fell $1.06 to $53.63 a barrel on Tuesday. Brent crude oil
, the international standard, fell 5 cents to close at $58.89 a barrel.
rose to 106.10 Japanese yen from 106.40 yen on Tuesday.