Chinese stocks volatile a day after dragging down global markets

BEIJING - Chinese stocks were volatile Friday and other Asian markets rebounded after a plunge in Chinese prices rattled global markets.

See Full Article

The Shanghai Composite Index was up 2.4 per cent at 3,199.56 by late morning after swinging between gains and losses.

Trading in Chinese stocks was suspended Thursday after a key index plunged 7 per cent. China's stock markets have little connection to the rest of its economy but two sharp price declines this week have focused attention on the slowdown in Chinese growth.

Stocks worldwide and oil fell on concern about weaker Chinese demand. The Dow Jones industrial average sank 2.3 per cent and the Standard & Poor's 500 lost 2.4 per cent on Thursday. The Nasdaq composite index fell 3 per cent.

European markets also fell. Germany's DAX slid 2.3 per cent, France's CAC 40 gave up 1.7 per cent, and Britain's FTSE 100 lost 2 per cent.

"The poor start to the year clearly warns that global growth concerns remain, that commodity prices are still under downwards pressure and that volatility in investment markets will likely remain high," said strategist Shane Oliver of AMP Capital in a report.

In other Asian markets, Tokyo's Nikkei 225 rose 0.4 per cent to 17,848.10 while Sydney's S&P/ASX 200 was off 0.7 per cent at 4,973.20. Hong Kong's Hang Seng advanced 1.1 per cent to 20,559.34 and Seoul's Kospi was little changed at 1,903.14. Stocks rose in Taiwan and were mixed in Southeast Asia.

On Thursday, Chinese stock trading halted for the day after a key index known as the CSI 300 plunged 7 per cent, tripping a "circuit breaker" that is meant to dampen volatility. On Friday, that benchmark gained 3 per cent at the opening, then fell to a 4.3 per cent loss before recovering.

Late Thursday, Beijing suspended use of that "circuit breaker" after economists warned it was adding to volatility by encouraging investors to sell faster when the market falls.

The latest plunge in Chinese stocks was set off by concern Beijing is allowing its yuan to weaken too fast against the dollar.

The People's Bank of China has allowed the yuan to decline gradually since August after loosening its tie to the dollar. The American currency has risen over the past year, leaving the yuan overvalued compared with other developing countries and hurting Chinese exporters.

On Thursday, the yuan's exchange rate was set at its lowest level since 2011, sparking fears further declines might lead to a capital outflow.

"We suspect this is poor communication by the People's Bank rather than a deliberate devaluation," said David Rees of Capital Economics in a report.

Worries about China were fueled by weaker-than-expected December manufacturing activity. Those fears have drowned out signs that the United States and Europe are doing fairly well.

In energy markets, U.S. crude sank Thursday to its lowest level in 12 years on fears Chinese demand might weaken. The benchmark U.S. rebounded moderately in Asian daytime hours, rising 67 cents to $33.94 in electronic trading on the New York Mercantile Exchange. On Thursday, the contract lost 70 cents to $33.27.

Brent crude, used to price international oils, rose 70 cents to $34.45 a barrel in London. On Thursday, it lost 48 cents to $33.75.

In currency markets, the dollar fell to $1.0883 from $1.0917 in the previous trading session. The dollar rose to 118.26 yen from 117.74 yen.



Advertisements

Latest Economic News

  • Real estate reality check: CBC's Marketplace consumer cheat sheet

    Economic CBC News
    Miss something this week? Here's the consumer news you need to know from CBC's Marketplace. Get this in your inbox every Friday. Sign up here. House cooling Time for some cold water on that hot southern Ontario real estate market? Here's how the province is proposing to rein in the madness. Source
  • Birthing April the Giraffe becomes cash cow for tiny U.S. zoo

    Economic CTV News
    April the giraffe has become a cash cow for a tiny zoo in rural upstate New York, thanks to a livestream of her pregnancy and birth that has enthralled viewers around the world. Owners of the Animal Adventure Park won't say exactly how much they've pulled in from all the April-related ventures, but marketing experts who specialize in viral internet campaigns conservatively estimate the haul in the hundreds of thousands of dollars. Source
  • Despite special regulations, edible entrepreneurs hope to take bite of Canada's marijuana market

    Economic CBC News
    Amid all the uncertainty about the federal government's ?plans to legalize marijuana by mid-2018, a culinary mystery stands out: How will marijuana-infused food products, commonly called "edibles," fit into the legal regime? Ottawa has signalled that regulations governing the sales of edibles won't be ready by the time recreational marijuana becomes legal. Source
  • 'Vital for tenants' or 'textbook' bad policy: How rent control works in NYC

    Economic CBC News
    Before Ontario's provincial government announced its plans to expand rent control, some economists were already sounding alarm bells about imposing the controversial policy. In response to some Toronto tenants who say their rents have doubled, the government on Thursday unveiled its Fair Housing Plan. Source
  • What we can learn from New York's rent control regime

    Economic CBC News
    Before Ontario's provincial government announced its plans to expand rent control, some economists were already sounding alarm bells about imposing the controversial policy. In response to some Toronto tenants who say their rents have doubled, the government on Thursday unveiled its Fair Housing Plan. Source
  • Despite special regulations, entrepreneurs hope to take bite of Canada's marijuana edibles market

    Economic CBC News
    Amid all the uncertainty about the federal government's ?plans to legalize marijuana by mid-2018, a culinary mystery stands out: How will marijuana-infused food products, commonly called "edibles," fit into the legal regime? Ottawa has signalled that regulations governing the sales of edibles won't be ready by the time recreational marijuana becomes legal. Source
  • Canada's central banker on Ontario housing move: 'I'm happy'

    Economic CTV News
    WASHINGTON -- Measures to cool the housing market in the Greater Toronto Area have received a warm response from Canada's central banker, who said Saturday it should have some effect on runaway housing prices. "I'm happy there are measures," Stephen Poloz, the governor of the Bank of Canada, told reporters during financial meetings in Washington. Source
  • Opening shot coming this week in fifth softwood lumber war between Canada-U.S.

    Economic CTV News
    WASHINGTON -- The opening shot in a fifth softwood-lumber war between the United States and Canada is expected this week, and policy-makers north of the border are preparing to calculate the potential damage of American duties. Source
  • Global finance leaders grapple with globalization fears

    Economic CTV News
    From left, German Federal Minister of Finance Wolfgang Schauble, Zhou Xiaochuan, Governor of the People's Bank of China, Chinese Finance Minister Xiao Jie and International Monetary Fund Managing Director Christine Lagarde gather for the Family Photo during the G20 at the 2017 World Bank Group Spring Meetings in Washington, Friday, April 21, 2017. Source
  • LinkedIn for farmers aims to remedy labour shortage

    Economic CTV News
    If you know how to tag and process cattle or drive a “semi to haul silage,” or need to hire someone who does, this new website could be for you. WorkHorsehub.ca is a farmer-designed online hub aimed at connecting agriculture workers with jobs in the industry. Source