High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/f651dfb2-b8da-11e5-bf7e-8a339b6f2164.html#ixzz3x2eu9viF
The pan-European Stoxx 600 is up 1.6 per cent and Germany’s Dax is adding 2.4 per cent, led by exporters. The FTSE 100 is climbing 1.8 per cent as some miners rebound.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/f651dfb2-b8da-11e5-bf7e-8a339b6f2164.html#ixzz3x2eyJTpB
The S&P 500 is opening up 14 points at 1,938, a sharp turnround from earlier when futures suggested it would open down from yesterday’s close. Despite this, it remains close to its lowest level since the start of October.
The picture was less positive in Asia, however, and the FTSE Asia Pacific index fell 1.7 per cent to hover near a three-year trough.
The better tone to US equities comes after the S&P 500 last week recorded its worst five-day start to a new year as bulls trimmed positions amid worries valuations could not be justified given prospects for global growth.
Alcoa, the aluminium group, late on Monday kicked off the US fourth-quarter earnings season with results that illustrated how low prices for metals are hitting the materials sector.
S&P Capital IQ expects aggregate earnings for S&P 500 materials groups will fall nearly 25 per cent compared with the same period a year ago. The price of copper is down 0.3 per cent to $4,399 a tonne, a six-year low, amid broad weakness for base metals.
US energy company earnings are forecast to fall 68.7 per cent because of tumbling oil prices. Brent crude is paring early losses which dragged it towards $30 a barrel, and is now trading up 1.4 per cent at $32 a barrel.
The slide in commodity prices illustrates not just ample supply — most notably in the oil market — but also fears about faltering demand from China.
“China and its currency are driving markets,” said Morgan Stanley in a presentation to clients. “This is not just about the world’s second-largest economy. The dynamics of CNY [the renminbi] mean weakness can beget more weakness. We think risk markets will struggle to bottom without more clarity on China’s policy strategy.”
The People’s Bank of China set the reference rate for the renminbi at Rmb6.5628 per dollar, basically unchanged from Monday and marking a third straight day of relative stability, following eight sessions of weakening that spurred last week’s global market rout.
The overnight CNH Hong Kong Interbank Offer Rate (Hibor) set a new record, rocketing from an already elevated 13.4 per cent on Monday to 66.8 per cent on Tuesday morning. The onshore and offshore renminbi rates then converged to parity for the first time since October. Only last week, the gap between the two rates hit a record high.
High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/f651dfb2-b8da-11e5-bf7e-8a339b6f2164.html#ixzz3x2f0MxgW
hinese shares swung in and out of positive territory after tumbling more than 5 per cent on Monday. But eventually the Shanghai Composite finished up 0.2 per cent, helping calm broader market nerves.
Not in Japan, though. The Nikkei 225 returned from a long weekend to stumble 2.7 per cent to a three-month low as the exporter-sensitive stock average was rattled by further initial gains for the yen.
Japan’s currency has been benefiting from investors “flight to safety” during the recent market turmoil, though amid a calmer market tone on Tuesday, it is flat at Y117.73.
Lower commodity prices also meant the resources-heavy Australian stock market extended its miserable run, with the S&P/ASX 200 down 0.1 per cent to record its eighth fall in a row.
Fixed income markets are a touch softer as risk appetite improves. The yield on the 10-year Treasury, which moves inversely to the price, is up 2 basis points to 2.18 per cent and equivalent maturity German Bunds are adding 2bp to 0.56 per cent.
Gold has pared early gains, and is now trading down $6 at $1087.
In other foreign exchange news, sterling is at a five and a half year low against the dollar following weak UK production data, retreating 0.8 per cent to $1.4424.
