TMS: Chinese stocks up slightly as other Asian markets fall
HONG KONG — Chinese stock markets eked out a last-minute gain Tuesday as a continuation of volatile trading sent other Asian benchmarks lower while European shares stabilized.
KEEPING SCORE: European stocks opened higher, with France’s CAC 40 rising 0.5 per cent to 4,333.57. Germany’s DAX advanced 0.9 per cent to 9,910.63. Britain’s FTSE 100 climbed 0.2 per cent to 5,885.63. U.S. stocks were poised to open higher. Dow futures rose 0.1 per cent to 16,299.00. Broader S&P 500 futures added 0.1 per cent to 1,916.80.
CHINA VOLATILITY: Worries about the Beijing’s ability to manage financial markets coupled with deepening fears about a protracted slowdown in the world’s No. 2 economy continue to keep investors on edge after sharp losses over the past week. After losing 5 per cent the day before, stocks in Shanghai zigzagged throughout the day.
YUAN MOVES: China’s tightly controlled onshore yuan, which was the source of last week’s market turmoil after authorities guided it sharply lower, was little changed. However, interbank rates spiked for the offshore yuan, which is freely traded in Hong Kong, leading many to believe China’s central bank is intervening in the market in order to foil speculators trying to drive it lower. The rate that Hong Kong banks lend yuan to each other overnight soared to 66 per cent from 13.4 per cent on Monday and 4 per cent last week, making it more profitable to hold the currency.
QUOTABLE: “In the Chinese equity markets so much damage was done to investor confidence last week” by new “circuit breaker” trading halt mechanisms that backfired, said analyst Angus Nicholson of IG. “I think that has really done a significant amount of damage to Chinese investor confidence and confidence in the government’s ability to manage and regulate Chinese capital markets,” he said. “Concerns about how the Chinese economy is faring has only added to these other concerns. I think we still are seeing that today.”
ASIA’S DAY: Japan’s benchmark Nikkei 225 reopened after a holiday, falling 2.7 per cent to close at 17,218.96 as the index caught up with losses the previous day on other Asian markets. The Shanghai Composite Index in mainland China fluctuated between gains and losses throughout the day before ending 0.2 per cent higher at 3,022.86. Other regional indexes opened higher but reversed course to finish in the red. Hong Kong’s Hang Seng shed 0.9 per cent to 19,711.76 and South Korea’s Kospi edged 0.2 per cent lower to 1,890.86 while Australia’s S&P/ASX 200 dipped 0.1 per cent to 4,925.10.
ENERGY: Benchmark U.S. crude extended losses, falling 76 cents to $30.65 a barrel in electronic trading on the New York Mercantile Exchange. The contract dropped $1.75, or 5.3 per cent, to settle at $31.41 a barrel on Monday. The last time it finished lower was Dec. 5, 2003, when it closed at $30.73 a barrel. Brent crude, a benchmark for international oils, fell 55 cents to $31.33 a barrel in London.
CURRENCIES: The dollar edged lower to 117.53 yen from 117.63 in the previous day’s trading. The euro rose to $1.0876 from $1.0861.
