Asian shares are at the 17-month low while China drops the yuan

Asian shares are at the 17-month low while China drops the yuan https://www.eresviral.com/wp-content/uploads/2018/10/Las-acciones-de-Asia-se-encuentran-en-el-mínimo-de-17-meses-mientras-China-deja-caer-el-yuan

Asian shares are at the 17-month low while China drops the yuan







SYDNEY (Reuters) - Asian shares reached 17-month lows on Tuesday when China allowed its currency to slip out of a psychological bulwark amid heavy losses in the national stock markets, a change that pressured other emerging currencies to depreciate and stay competitive. 











FILE PHOTO: A note of China's yuan is seen in this illustration, photo, May 31, 2017. REUTERS / Thomas White / Illustration





The IMF added to the malaise by reducing world growth forecasts for both this year and next, including declines in prospects for the United States, China and Europe. 

"The risk sentiment is in a bad mood and stocks are sinking everywhere," JPMorgan analysts said in a note.  

"Given that the Chinese economic momentum continues to weaken along with the growing pressure from the United States, the weakness of the currency is the obvious release valve," they warned. "A shake through the 7.0 level by the end of the year is possible." 

China's central bank set its yuan at 6.9019 per dollar on Tuesday, breaking the 6.9000 barrier and leading speculators to boost the dollar to 6.9320 in the spot market. 

The drop should be positive for exporters and helped Shanghai blue chips rise briefly 0.1 percent in the initial trade before trading almost unchanged. However, that follows a 4.3 percent drop on Monday, which was the biggest daily decline since early 2016. 

MSCI's broader Asia-Pacific stock index outside of Japan declined another 0.2 percent after ending Monday at its lowest point since May last year. 

Japan's Nikkei fell 1.2 percent, partly affected by an increase in the yen of the safe harbor. 

On Monday, a senior US Treasury official expressed concern over the fall of the yuan, adding that it was not clear whether Treasury Secretary Steven Mnuchin would meet with a Chinese official this week. 

On Wall Street, the heavy Nasdaq technology fell on Monday for the third day in a row and growth stocks were pressured by concerns that higher bond yields could ultimately hinder the economy. 

The S & P 500 lost 0.04 percent and the Nasdaq Composite 0.67 percent, while the Dow rose 0.15 percent as defensive stocks found buyers. 









FILE PHOTO: A man goes through the screens that show information on shares in a brokerage house in Jiujiang, Jiangxi Province, China, October 8, 2018. REUTERS / Stringer  



WITHOUT SECURITY NETWORK 

The 10-year Treasury paper yield remained at 3.24 percent on Tuesday, close to a seven-year high. 

Treasury bonds have had a kind of safety net so far, as rising yields tend to curb stocks and threaten economic prospects, which pressures the Federal Reserve to lower policy. 

However, recently the Fed has sounded optimistic about the economy and so aggressive about the rates that the network has worn out. 

"The size and speed of the bearish bond impulse would suggest a collective shift in market thinking about US growth prospects and policy projections," said Damien McColough, head of Westpac's rate strategy. 

"The expected 2019 profile of the Federal Reserve has gone from just under 2 rises to 2.5 rises," he added. 

That change has propped up the dollar against a basket of currencies where it stood at 95,754, from a low of 93,814 just a couple of weeks ago. 

The dollar had less luck with the safe haven yen that retreated to 113.07 from a high of 114.54 last week. 

The euro was undermined by political problems in Italy and was reduced to $ 1.1490, well above the maximum of $ 1.1815 in September. 

The costs of Italy's loans have increased as the war of words between Rome and the European Union increased due to the country's budget plans. 

The yield on 10-year Italian government bonds rose more than 20 basis points to 3.626 percent, the highest since February 2014, while Italy's FTSE MIB index fell to its weakest level since April 2017. . 

Brazil's real currency hit a two-month high and shares rose after a strong first-round victory by presidential candidate Jair Bolsonaro on Sunday. 

In the commodities markets, gold only obtained a marginal security offer of $ 1,189.41, having fallen by 1.4 percent overnight. 

Oil prices changed little as more evidence emerged that Iran's crude exports are declining in the run-up to the re-imposition of US sanctions, while a hurricane moved through the Gulf of Mexico. [O/R] 

Brent crude added 3 cents to $ 83.94 per barrel, while US crude reaffirmed 5 cents to $ 74.34.  





Edition by Shri Navaratnam





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