Markets

Battered China stocks off to worst start to second half since 2015

Battered China stocks off to worst start to second half since 2015

Nagging worry about U.S. President Donald Trump's trade tariff plans extended a slide in Asian equity markets.

Asian markets were mixed Tuesday, but while they were up from earlier lows, investors continued to fret over looming US-China tariffs that bring a potential trade war a step closer.

"Swap points were falling sharply, as big banks were offering", one of the traders said.

China's state-owned banks have reportedly been buying USA dollars in forwards on behalf of the central bank (PBOC) and immediately selling them into the spot market to support the yuan.

The central bank earlier set the midpoint at 6.6497 yuan per dollar, its weakest fixing in about 10 months.

Speculation was rife China's central bank was intervening in the currency market to staunch losses and prevent a potentially destabilizing sell-off in the yuan, while stocks came off a searing sell-off in the morning.

"U$3 ltimately, the proof will be in the pudding [on foreign investments] and in the meantime, there is still no sign of the USA and China restarting trade negotiations ahead of the July 6 start date for tariffs".

China remains at the epicentre of FX markets, and while yesterdays price action was fast and decisively USDCNH lower, market conditions ahead of the 4th of July and Friday NFP combined with the start of U.S.

In equities markets, the benchmark CSI300 Index and the Shanghai Composite Index were both down about 0.3 percent.




The Shenzhen Component Index closed 0.45 percent higher at 9,221.54 points. "The euro/dollar is misleading and it looks like nothing is happening", she said, adding that the market needed to see data on whether the trade dispute was so far having an impact on the real economy.

Also on Monday, Washington moved to block China Mobile from offering services to the US telecommunications market, recommending its application be rejected because the government-owned firm posed national security risks.

Recent losses - the index is down almost 22 percent from a recent high in January - appear to have fueled concern among Chinese authorities.

RBA Governor Philip Lowe said "one uncertainty regarding the global outlook stems from the direction of worldwide trade policy in the United States", cautioning that the recent U.S.

That helped MSCI's world index to rise 0.25 percent, inching further off 2-1/2 month lows hit last week. -China trade tariffs, traders were more concerned about jettisoning risk which could have contributed to the amplified price action.

China is Australia's major export market and its currency, the Australia dollar, is considered a liquid proxy for China-related risk.

The Aussie was steady at $0.7338 after dropping to $0.7311 overnight, its lowest since January 2017.

U.S. crude oil futures climbed above the $75 mark for the first time in 3-1/2 years overnight and hovered near that level on Wednesday.