Connect with us

Hi, what are you looking for?


Oil price and global stock markets recover as China boosts yuan

Oil prices have rebounded and global stock markets recovered after Beijing mustered what analysts called its “national team” to intervene and boost the yuan.

The price of Brent crude, the global benchmark, rose more than 2% and later traded 1.8% higher at $34.36 a barrel. On Thursday, it had hit $32.16, the lowest since April 2004.

Chinese stocks recovered by 2% on Friday after the People’s Bank of China strengthened its official rate for the first time in nine trading days. The depreciation of the yuan has spooked investors and fuelled capital flight out ofChina.

Beijing also performed a dramatic U-turn on Thursday by deactivating a stock market circuit-breaker, itself was blamed for aggravating this week’s market falls. At the start of the day, trading was halted after less than 30 minutes when stocks plunged by more than 7% – the second time the circuit-breaker was triggered since its introduction this week. The move sent global stocks tumbling.

Jasper Lawler, market analyst at CMC Markets, said: “China’s removal of counter-productive circuit breakers, state buying and a rise in the yuan helped prevent another stock market rout and alleviated concerns that the central bank would continue the rapid devaluation of the currency.”

The recovery in China boosted stocks in Europe and Asia Pacific. The FTSE 100 index in London rose nearly 40 points to 5591.89, a 0.6% gain. Germany’s Dax is 0.9% ahead, France’s CAC has added 0.6% while Spain’s Ibex is up 0.7%.

Angus Nicholson, market analyst at IG, said: “The big thing [is] that we have seen the Chinese government rallying the ‘national team forces’ in both the currency market and the equities market,” he said, as traders reported China’s state-owned banks intervening to prop up the yuan.

After a day of wild trading, the Shanghai Composite Index and the CSI 300, which comprises the biggest stocks from the Shanghai and Shenzhen stock exchanges, both finished about 2% higher, at 3186.78 and 3361.56 respectively. Hong Kong’s Hang Seng added 0.6% to 20,453.71.

However, other markets continued to suffer. Japan’s Nikkei and the Australian market both closed 0.4% lower, with Australian shares ending a sixth straight day in the red.

Advertisement. Scroll to continue reading.

Marc Ostwald, market strategist at ADM ISI, said: “China’s authorities have clearly bitten far more than they can chew in their markets and economy reform efforts, with a clear sense that they are at best fumbling in the dark emerging.”

The latest bout of stock market turmoil presents a major challenge to the Chinese president, Xi Jinping, who has portayed himself as the country’s top economic steward, ahead of the prime minister, Li Keqiang.

Xi was reportedly livid over a humiliating stock market debacle in mid-2015, lambasting senior economic officials after he appeared on the front cover of the Economist fighting to prop up Chinese shares.

Experts say the credibility of Beijing’s economic policymakers has been further damaged by the latest turmoil.

The Japanese finance minister, Taro Aso, questioned whether Beijing could afford to keep supporting the yuan in light of its record decline in foreign reserves last month.

There were unconfirmed reports on Friday morning that Xiao Gang, the head of the China Securities Regulatory Commission (CSRC), would resign.

Christopher Balding, a professor of finance and economics at Peking University’s HSBC business school, said Beijing’s economic flip-flopping and “wild swings in policymaking” had severely damaged confidence.

“Chinese investors want very similar things that international investors want: they want clarity, they want to understand what is going on, they want to know what the policies are, they want stability and [to know] what the rules are,” he said.

“The constant back-and-forth and changes just don’t engender confidence that Beijing has really any idea what they are doing.”

Advertisement. Scroll to continue reading.


You May Also Like


Professing to be the lead in Thai relationship with over 1.5 million enrolled single people, Cupid Media’s ThaiCupid brings the one in every of...


Read more about switzerland women here. Swiss ladies and men are not reknown for being the most chatty, outgoing or spontaneous when meeting strangers...


An exclusive article form Orestis Karipis In the 1930’s and 1940’s acid was the weapon of deceived husbands and wives in the Western world...


In food, if there is one thing you can say without fear of contradiction, it is this: Britain loves burgers. The UK market is...

Copyright © 2020 All Rights Reserved