World stocks tread water as easing US-China tensions boost yuan

Traders work on the floor of the New York Stock Exchange March 7, 2019. — Reuters pic
Traders work on the floor of the New York Stock Exchange March 7, 2019. — Reuters pic

NEW YORK, Jan 15 — Global stocks were range-bound yesterday while the yuan advanced against the dollar after Washington said it no longer considered China a currency manipulator and tensions eased between the economic titans.

New York was also rattled by news reports yesterday that US President Donald Trump intended to keep most punitive US tariffs on Chinese imports until after the 2020 presidential election. 

US stocks finished lower, pulling back from Monday’s records, while London rose and Europe edged downward.

The US Treasury announcement on the Chinese currency late Monday came as the two countries prepare to sign the first part of a wider trade agreement that has helped fan a rally in world equity markets.

Washington’s decision triggered a sell-off in haven assets, including the yen and gold.

In August, Trump accused Beijing of weakening its currency “to steal our business and factories,” re-stating a long-standing grievance.

The dollar slumped to 6.8670 yuan at one point, the lowest level since July, before rebounding somewhat.

“The yuan is the purest and best barometer to gauge the market’s view on US-China trade tension,” said AxiTrader’s Stephen Innes.

“With the yuan strengthening ahead of the ‘phase one’ deal signing, it’s indicating the potential for further improvement in trade relations.”

The US reversal of China’s status as a manipulator “is a most precise and definitive de-escalation of trade tension to date and provides a less congested road as we pivot to phase two of the broader trade agreement,” Innes added.

Still, equity markets were a bit edgy ahead of today’s expected signing of the US-China agreement.

Some investors have been expecting a pullback following the surge in recent weeks that have left the market in what analysts have called an “overbought” condition.

Earlier, Tokyo’s main stocks index rose 0.7 per cent as the dollar advanced against the yen owing to a rush out of safety — giving a boost to Japan’s exporters.

However, profit-taking saw Hong Kong drop 0.2 per cent and Shanghai slip 0.3 per cent following recent advances.

Key figures at 2145 GMT

New York - Dow: UP 0.1 per cent at 28,939.67 (close)

New York - S&P 500: DOWN 0.2 per cent at 3,283.15 (close)

New York - Nasdaq: DOWN 0.2 per cent at 9.251.33 (close)

London - FTSE 100: UP 0.1 per cent at 7,622.35 (close)

Frankfurt - DAX 30: FLAT at 13,456.49 (close)

Paris - CAC 40: UP 0.1 per cent at 6,040.89 (close)

EURO STOXX 50: DOWN 0.1 per cent at 3,774.88 (close)

Tokyo - Nikkei 225: UP 0.7 per cent at 24,025.17 (close)

Hong Kong - Hang Seng: DOWN 0.2 per cent at 28,885.14 (close)

Shanghai - Composite: DOWN 0.3 per cent at 3,106.82 (close)

Dollar/yuan: DOWN at 6.8836 yuan from 6.8938 yuan

Pound/dollar: UP at US$1.3019 from US$1.2989 

Euro/pound: DOWN at 85.46 pence from 85.72 pence 

Euro/dollar: DOWN at US$1.1126 from US$1.1134 

Dollar/yen: UP at ¥109.98 from 109.95 

Brent Crude: UP 0.5 per cent at US$64.49 per barrel

West Texas Intermediate: UP 0.3 per cent at US$58.23 per barrel — AFP

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