Stock Futures Plummet as China Devalues Yuan

Share

In a statement, the People's Bank of China denied intentionally weakening the yuan as a retaliatory move against the US, saying it would "not engage in competitive devaluation" or "use the exchange rate as a tool to deal with external disturbances such as trade disputes", according to a translation. The sharp drop in oil prices should be especially ominous for the president - that's the market saying that what he and Xi are doing is expected to cause real harm to global demand and output (that's why oil's getting cheaper: fewer people are expected to want to buy it).

China's central bank is confident and capable of keeping the yuan basically stable at reasonable and balanced levels after it weakened past the key 7 per dollar level on Monday morning.

Dow Jones prices nosedived at a time of heightened volatility in the financial markets with the pan-European Stoxx 600 falling by nearly 2 percent - on top of a 2.5 percent drop seen on Friday, the worst performing day for it in 2019. Apple fell three per cent and Microsoft fell 2.4 per cent. Currency depreciation makes Chinese exports cheaper overseas so it can undermine the effects of tariffs.

The weak yuan ignited fear on Wall Street that a currency war has begun or that the United States would respond with even higher tariffs, prolonging the standoff with China and potentially weakening the global economy.

Trump last week proposed adding 10% tariffs on another $300 billion in Chinese imports from September 1, abruptly ramping up the trade war between the world's largest economies shortly after the two sides had restarted talks.

US stocks plummeted at the open Monday as China struck back in response to President Trump's threat to levy further tariffs on Chinese goods in the ever-growing trade war, rattling investors and bringing global markets to their knees.

Love Island final attracts record 3.6 million viewers
Curtis and Maura, who came in fourth place on the popular show, joked about joining Strictly Come Dancing as their next project. Greg's cousin Kelvin Brown said he was not surprised Greg won the series, and gave Amber his seal of approval.

Just over an hour into trading, the Dow Jones Industrial Average had lost about 500 points, dropping 1.9 percent to 25,987. The S&P 500 is 5.8% below its record.

China's move gives rise to an even gloomier outlook in the trade conflict that has tied up the world's two most powerful economic engines for more than a year, while threatening the health of the global economy and upending the foundations of worldwide trade.

Hit particularly hard were tech stocks. The central bank also said the yuan has strengthened 20 percent against the dollar over the past two decades. "So one-sided, it should have been stopped many years ago!" he wrote. Profit for companies in the S&P 500 is now expected to contract by roughly 1%.

Companies are in the final stretch of the latest round of quarterly earnings reports and the results haven't been as bad as initially feared.

Spot gold rose 1.4 percent to trade at $1,460.11 (£1201.67) per ounce at around 8:15 am ET (1.15pm BST) which marked its highest level since May 2013.

The French CAC 40 tumbled 1.96% at the open. German 30-year bonds went into negative yield for the first time in history and the Swiss Franc has gained almost 3% against the dollar since Thursday. Brent crude, used to price global oils, shed 72 cents to $61.17 in London.

Share