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Global stocks, Asian currencies fall as China devalues yuan

Global stocks, Asian currencies fall after China unexpectedly devalues yuan

Global stocks, Asian currencies fall as China devalues yuan

BEIJING (AP) -- Global stocks and Asian currencies fell Tuesday after China unexpectedly devalued the yuan in response to weakening trade and growth.

KEEPING SCORE: In early trading, France's CAC-40 fell 0.9 percent to 5,150.49 and Germany's DAX lost 0.8 percent to 11,512.47. Britain's FTSE 100 shed 0.4 percent to 6,712.12. Wall Street looked set to give up some of the previous day's gains. The future for the Dow Jones industrial average fell 0.3 percent to 17,502.00. S&P 500 futures eased 0.3 percent to 2,094.20.

CHINA'S DEVALUATION: Beijing's devaluation of the yuan allowed it to fall by its biggest one-day margin in a decade. The central bank said the 1.9 percent fall was due to changes aimed at making the way it sets exchange rates more market-oriented. In recent months, the yuan has strengthened along with the U.S. dollar as currencies of other developing countries weakened, hurting Chinese exporters. Exports fell by an unexpectedly large 8.3 percent in July. The People's Bank of China said market forces would be given a bigger role in setting the exchange rate, leaving open the possibility of more declines.

ASIA'S DAY: Tokyo's Nikkei 225 lost 0.4 percent to 20,720.75 and Seoul's Kospi was off 0.8 percent at 1,986.65. The Shanghai Composite Index ended little changed at 3,927.91 and Hong Kong's Hang Seng declined 0.1 percent to 24,498.21. Sydney's S&P/ASX 200 lost 0.7 percent to 5,473.20 and India's Sensex shed 0.7 percent to 27,942.70. Singapore, Bangkok and Jakarta also retreated.

THE QUOTE: China's yuan announcement "looks to be a move to a more open market policy," said Stephen Innes, senior trader at OANDA. "Traders are looking for U.S. dollar strength across the Asia region and pressure on all local currencies," he said. "The market is extremely volatile at moment."

CURRENCIES: The Australian dollar sank 1.3 percent to $0.7330. The U.S. dollar also gained against a raft of Asian currencies including a 0.5 percent rise against the Indian rupee and a 1.5 percent jump against the South Korean won. It rose 0.7 percent versus the Indonesia rupiah. The euro rose to $1.1041 from $1.1021. The dollar gained to 124.82 yen from Monday's 124.55 yen.

FED WATCH: Some investors are anticipating the Federal Reserve will raise interest rates next month. That unnerves them because rates close to zero have been a major factor in driving a bull-market in stocks that has lasted for more than six years.

ENERGY: Benchmark U.S. crude rose 6 cents to $45 per barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $1.09 to $44.96 on Monday. Brent crude, used to price international oils, added 2 cents to $50.43 after soaring $1.80 the previous session to $50.41.

Updated : 2021-09-23 18:13 GMT+08:00