Breaking News
0

Stocks, commodities regain footing after slump

Stock MarketsJul 12, 2018 05:09AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Stocks, commodities regain footing after slump

By Marc Jones

LONDON (Reuters) - Stocks and commodity markets regained some poise on Thursday, having suffered wild tailspins in the previous session as the United States ratcheted up trade war threats on China.

A 2 percent rebound on China's big bourses (SS) steadied Asian nerves as oil markets clawed back some of Wednesday's 7 percent slump that had marked their worst day in 2-1/2 years.

Beaten-up industrial metals including copper and nickel and European stocks pulled higher too in early trade (EU), while there was some relief for Turkish markets after the lira had been dumped to a record low by interest rate cut talk from its re-elected President Tayyip Erdogan. (IS)

The dollar meanwhile rose to a six-month high against the Japanese yen after U.S. inflation data that bolstered the case for more Federal Reserve rate hikes this year.

"It mostly seems to be relief after the all-red, risk-off day yesterday," said Rabobank strategist Bas Van Geffen.

"The basis for this is not entirely clear to me though because it doesn't seem like this (U.S. threats of another $200 of China trade tariffs) has actually restarted negotiations with China... In fact I would argue that it has made the risk of an accident or an unwanted outcome bigger."

Europe's moves were less pronounced than Asia's had been, perhaps reflecting that caution.

The Shanghai Composite and blue-chip CSI300 indexes had both ended the day up 2.2 percent. Shares in Japan (T), Australia and Hong Kong closed 1.1, 1 and 0.6 percent higher respectively.

The pan-European STOXX 600 inched up just 0.2 percent though, with gains in the healthcare and consumer sectors offset by losses in the banking sector and in energy firms after the dramatic drop in oil prices.

Germany's 10-year bond yield and the euro were both broadly steady with traders awaiting minutes from the most recent European Central Bank meeting. A Reuters report showed its policymakers remain split on when to raise interest rates next year.

The difference between 10-year U.S. Treasuries and equivalent German Bund yields stood near 30-year highs at 2.59 percent.

"If stocks drop sharply then the Fed will pause and, moreover, we think the U.S. is toward the end of its rate hike cycle," said Thu Lan Nguyen, an FX analyst at Commerzbank (DE:CBKG) in Frankfurt.

CAUTION, FRAGILE CHINA

Focus was still on what the next steps in the tit-for-tat trade conflict might be. China has accused the United States of bullying and warned it could hit back, although the form of retaliation is not yet clear.

The retaliatory options available to China include boycotting American goods, sharply devaluing the yuan, and selling off U.S. Treasury holdings, Xiao Minjie, senior economist at SMBC Nikko Securities in Tokyo, wrote in a note.

China's yuan had strengthened 0.3 percent overnight though,, partially recovering from a big slide the previous day after an official currency market level set by the People's Bank of China was not as weak as some had feared.

"It shows the central bank intends to stabilize the market and calm investors. One-way speculation on the yuan's depreciation is not in Chinese authorities' interests," said Qi Gao, Asia FX strategist at Scotiabank in Singapore.

The dollar index against a basket of six major currencies was steady at 94.700 after gaining 0.6 percent overnight.

Against the yen, which usually strengthens in times of political tension and market turmoil, the greenback stretched its overnight rally and rose to 112.385 yen, its highest since January.

Commodity-linked currencies such as the Australian dollar crawled higher having suffered deep losses on Wednesday. The Canadian dollar was also shade higher at C$1.3201 per dollar following a loss of 0.75 percent the previous day.

In commodities there was also stabilization.

Brent crude futures rose 1.5 percent to $74.52 a barrel after tanking 6.9 percent on Wednesday, after the trade tensions and signs Libya's oil exports could pick up again, triggered the biggest one-day percentage drop since February 2016.

Metals were recovering from their own 2-4 percent meltdown too. Copper on the London Metal Exchange rose 0.8 percent to $6,194.00 a ton. The industrial metal sank nearly 3 percent on Wednesday, plumbing a one-year low of $6,081.00.

Stocks, commodities regain footing after slump
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments
Peter Dikeakos
Peter Dikeakos Jul 12, 2018 6:26AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Volume is too LIGHT to make any long-term projections.
Reply
0 0
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email