Comments
Asian shares were mostly higher on Friday, but still on track for a steep weekly loss in the wake of China’s surprise currency devaluation earlier in the week.
Crude oil futures remained under pressure, plunging to 6-1/2-year lows after data revealed a big rise in US stockpiles, fuelling fears of a growing global glut.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.06 per cent, poised to end the week down 2.6 per cent.
Japan’s Nikkei stock index fell 0.1 per cent, and was down about 0.8 per cent for the week.
Midpoint yuan rate
The People’s Bank of China (PBOC) has set its midpoint yuan rate at 6.3975 per dollar prior to the market’s open, firmer than the previous day’s close of 6.3990. The spot market opened at 6.3990 per dollar and was changing hands at 6.3996 in the morning.
The Chinese central bank had set its rate nearly 2 per cent lower on Tuesday, a move it said was aimed at making its foreign exchange system more responsive to market forces.
“While assuring a more market-based formation of the daily fixing, the Chinese authorities might have to choose between two possible scenarios,’’ Citi analyst Minggao Shen wrote in a note.
“Limited RMB weakness in coming months with calculated interventions or tolerating more depreciation by intervening less. The spot market movement since late yesterday suggests the former is more likely.’’
The PBOC had reassured investors on Thursday, saying there was no reason for the yuan to fall further given the country’s strong economic fundamentals, helping to calm investors who pared holdings of risk assets for fear of a currency war.
Dollar vs yen
The dollar was steady against its Japanese counterpart at 124.42, off its two-month high of 125.28 hit on Tuesday. The euro was little changed at $1.1144, having gained 1.6 per cent this week.
The dollar came under pressure this week as the market instability caused by China’s devaluation curbed expectations that the US Federal Reserve's long-awaited interest rate increase would come as early as in its September 16-17 meeting.
Retail sales data
But strong US retail sales data on Thursday provided evidence in support of views that the Fed is on track to hike.
US retail sales rose in July and were revised up for June, while the trend of weekly jobless claims pointed to a tightening job market.
Crude oil
In commodities trading, crude oil futures extended sharp losses that pushed oil prices to levels not seen since early 2009, when the financial crisis was wreaking havoc on markets.
US crude settled down 3 per cent at a new 6-1/2-year low as a big rise in US stockpiles intensified worries over a growing global glut.
US crude oil was down 0.4 per cent at $42.07 a barrel in early Asia trade, while Brent rose 0.06 per cent to $49.25, after earlier falling to a low of $49.11, ahead of Friday’s expiry of its front-month contract.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.