U.S. shares were mostly flat on Wednesday after an afternoon rally helped major indexes recover from the previous day’s losses. Shares with a high exposure to the Chinese market plummeted on Tuesday after China’s central bank readjusted its policies in way that caused the yuan to drastically devalue. Some have accused the Chinese of attempting to offer its exporters an advantage during a period of weakness. Regardless, the currency devaluation is signaling that the second largest world economy is at the very least concerned about its slow growth.
Analysts are still certain that the global economy is still on track to expand as long as interest rates remain low. This trend will likely change as the Federal Reserve raises interest rates in the coming months, according to their own statements. The Dow Jones Industrial Average remained flat with a 0% change to trade at 17402.51 after losing as much as 277-points earlier in the session. The S&P 500 gained 1.98 points, or 0.1%, to close Wednesday’s trading session at 2086.05. The S&P marked its biggest intraday recovery since 2011 as companies that rely on Chinese sales rebounded after Tuesday’s declines. The NASDAQ Composite added 7.6 points, or 0.2%, to trade at 5044.39.
In Europe, stocks declined sharply as they mirrored the declines seen in earlier Asian trading. The declines marked the worst one-day losses since last year as China’s tightly controlled yuan was allowed to plummet even further. Some analysts believe this is the beginning of a “currency war” in which countries aim to weaken their currencies in a bid to boost growth and exports. Much like the U.S. market, European shares with high exposure to China suffered declines. These included carmakers Peugeot SA (OTC:PUGOY), BMW (XETRA:BMWG) and Fiat-Chrysler Automobiles (NYSE:FCAU), as well as luxury-goods markers Burberry Group (OTC:BURBY), LVMH (OTC:LVMUY) and Hermes International (OTC:HESAY). The STOXX 600 fell 2.7% to trade at 382.99 after Tuesday’s 1.6% decline. The German DAX fell 3.3% to trade at 10924.61 in its first sub-11000 close this month. The French CAC 40 tumbled 3.4% to trade at 4925.43 and the UK’s FTSE 100 fell 1.4% to trade at 6571.19.
Economic data releases scheduled for today includes U.S. retail sales followed the European Central Bank’s accounts of its monetary policy meetings. On Friday, Germany will release its GDP data followed by eurozone inflation data with the consumer price index.
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