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Chinese stock market closes 2% higher after 'national team' intervenes – live Chinese stock market closes 2% higher after 'national team' intervenes – live
(34 minutes later)
10.07am GMT10:07
Britain could lose almost 1% of global economic output if China’s economy suffers a serious hard landing, according to analysis from Oxford Economics.
And that would actually mean the UK gets off relatively lightly, compared to the pain which emerging markets would suffer.
Our estimates of GDP impact of China hard landing (1) advanced economies pic.twitter.com/VZ0cttuD7k
Our estimates of GDP impact of China hard landing (2) EM pic.twitter.com/wTaQiRLigq
9.55am GMT09:559.55am GMT09:55
Over in Hong Kong, investors are catching their breath after the worst new year week since 2000.Over in Hong Kong, investors are catching their breath after the worst new year week since 2000.
The Hang Seng index closed higher today, up 0.6%. But heavy losses earlier this week mean it lost 6.6% so far this year.The Hang Seng index closed higher today, up 0.6%. But heavy losses earlier this week mean it lost 6.6% so far this year.
9.53am GMT09:539.53am GMT09:53
Dr Nikos Paltalidis, lecturer in Finance at Durham University Business School, also reckons fears over China’s stock market are overblown.Dr Nikos Paltalidis, lecturer in Finance at Durham University Business School, also reckons fears over China’s stock market are overblown.
He points out that shares did soar by 50% last year - a clear sign of a speculative bubble that is now deflating. However, that doesn’t mean that the selloff won’t cause serious consequences.He points out that shares did soar by 50% last year - a clear sign of a speculative bubble that is now deflating. However, that doesn’t mean that the selloff won’t cause serious consequences.
Paltalidis says:Paltalidis says:
“The sudden wave of concern about China’s looming economic catastrophe is overblown.“The sudden wave of concern about China’s looming economic catastrophe is overblown.
However, the burst of the stock market bubble, increases the concern about the knock on effect on the real-estate market. Chinese policymakers might need to respond with additional currency devaluation, and if things get worse, some form of quantitative easing, to avoid a collapse in asset prices.However, the burst of the stock market bubble, increases the concern about the knock on effect on the real-estate market. Chinese policymakers might need to respond with additional currency devaluation, and if things get worse, some form of quantitative easing, to avoid a collapse in asset prices.
Updated at 9.53am GMTUpdated at 9.53am GMT
9.42am GMT09:429.42am GMT09:42
Despite today’s small recovery, European stock markets are on track for their worst week since last August’s rout (which was also triggered by China).Despite today’s small recovery, European stock markets are on track for their worst week since last August’s rout (which was also triggered by China).
Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers, says investors have adopted “the brace position” this week:, wiping around 5% off the major indices.Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers, says investors have adopted “the brace position” this week:, wiping around 5% off the major indices.
What should have been a perky start to 2016, with New Year optimism underpinned by portfolio positioning as investors buy stocks, has been eclipsed by ongoing concerns on global growth, the oil price and negative geopolitical developments.What should have been a perky start to 2016, with New Year optimism underpinned by portfolio positioning as investors buy stocks, has been eclipsed by ongoing concerns on global growth, the oil price and negative geopolitical developments.
The general souring of sentiment had been exacerbated by the Chinese circuit breakers, along with Fed minutes which questioned the strength of belief in the December hike and sellers apparently pushing against an open door.”The general souring of sentiment had been exacerbated by the Chinese circuit breakers, along with Fed minutes which questioned the strength of belief in the December hike and sellers apparently pushing against an open door.”
9.22am GMT09:229.22am GMT09:22
One of Angela Merkel’s top allies has called for calm over China.One of Angela Merkel’s top allies has called for calm over China.
Speaking on Bloomberg TV a moment ago, Michael Fuchs argued that the panic over China’s stock markets has been overdone.Speaking on Bloomberg TV a moment ago, Michael Fuchs argued that the panic over China’s stock markets has been overdone.
I do believe that China is getting back on track. It is still tracking a 7% growth rate - 7% growth is a decent number....I do believe that China is getting back on track. It is still tracking a 7% growth rate - 7% growth is a decent number....
I’m not so pessimistic that China is going to be in a deep crisis.I’m not so pessimistic that China is going to be in a deep crisis.
But Fuchs also warned that German industry, such as car markets and chemicals producers, will suffer if China’s economy weakens.But Fuchs also warned that German industry, such as car markets and chemicals producers, will suffer if China’s economy weakens.
9.15am GMT09:159.15am GMT09:15
There’s a sense of relief in the foreign exchange markets this morning, as emerging market currencies recover.There’s a sense of relief in the foreign exchange markets this morning, as emerging market currencies recover.
Ilya Spivak, currency strategist at DailyFX, has the details:Ilya Spivak, currency strategist at DailyFX, has the details:
Investors’ mood brightened after two days of aggressive selling after China suspended circuit-breakers that shut off stock market trade after just 14 minutes of activity yesterday and set the daily Yuan fix a bit higher.Investors’ mood brightened after two days of aggressive selling after China suspended circuit-breakers that shut off stock market trade after just 14 minutes of activity yesterday and set the daily Yuan fix a bit higher.
The risk-geared Australian, Canadian and New Zealand Dollars outperformed while the safety-linked Japanese Yen proved weakest on the session.The risk-geared Australian, Canadian and New Zealand Dollars outperformed while the safety-linked Japanese Yen proved weakest on the session.
8.56am GMT08:568.56am GMT08:56
In a few weeks Beijing will have a window of opportunity to take fresh steps to shore up its economy:In a few weeks Beijing will have a window of opportunity to take fresh steps to shore up its economy:
A month until Chinese New Year; markets take a break over the celebrations so it's a perfect time for fiscal and mon pol actionA month until Chinese New Year; markets take a break over the celebrations so it's a perfect time for fiscal and mon pol action
8.37am GMT08:378.37am GMT08:37
After 30 minutes of trading, European markets are all showing small gains:After 30 minutes of trading, European markets are all showing small gains:
8.37am GMT08:378.37am GMT08:37
This week’s ructions have not improved Beijing’s reputation for economic competence.This week’s ructions have not improved Beijing’s reputation for economic competence.
As Marc Ostwald of ADM Investor Services puts it:As Marc Ostwald of ADM Investor Services puts it:
As we have argued before, China’s authorities have clearly bitten far more than they can chew in their markets and economy reform efforts, with a clear sense that they are at best fumbling in the dark emerging.As we have argued before, China’s authorities have clearly bitten far more than they can chew in their markets and economy reform efforts, with a clear sense that they are at best fumbling in the dark emerging.
He also warns that the current calm in the markets is probably only “transitory”.He also warns that the current calm in the markets is probably only “transitory”.
8.25am GMT08:258.25am GMT08:25
The oil price is rising this morning, in another signal that markets are a little calmer this morning.The oil price is rising this morning, in another signal that markets are a little calmer this morning.
Brent crude has gained 1.5% to $34.26 per barrel, having hit fresh 11-year lows yesterday.Brent crude has gained 1.5% to $34.26 per barrel, having hit fresh 11-year lows yesterday.
8.16am GMT08:168.16am GMT08:16
Mining stocks are recovering some ground, with commodity trader Glencore up 2.3% and Rio Tinto up 1.5%.Mining stocks are recovering some ground, with commodity trader Glencore up 2.3% and Rio Tinto up 1.5%.
Again, a small move - as Accendo Markets’ Mike van Dulken points out:Again, a small move - as Accendo Markets’ Mike van Dulken points out:
Miners bouncing but hardly convincing of recovery. And anyway, what's changed fundamentally?Miners bouncing but hardly convincing of recovery. And anyway, what's changed fundamentally?
8.12am GMT08:128.12am GMT08:12
Europe’s stock markets are open, and showing some small gains in early trading.Europe’s stock markets are open, and showing some small gains in early trading.
The FTSE 100 has risen by 20 points, or 0.3%, to 5974, while Germany’s DAX is 0.4% higher.The FTSE 100 has risen by 20 points, or 0.3%, to 5974, while Germany’s DAX is 0.4% higher.
That’s pretty small potatoes, given the Footsie lost 2% yesterday while the DAX shed 3%.That’s pretty small potatoes, given the Footsie lost 2% yesterday while the DAX shed 3%.
8.07am GMT08:078.07am GMT08:07
Stock markets lose trillions this weekStock markets lose trillions this week
How much market value has been destroyed in this week’s stock market rout?How much market value has been destroyed in this week’s stock market rout?
According to CNBC’s Jacob Pramuk, we have lost.....(puts on Dr Evil voice) two trillion dollars!According to CNBC’s Jacob Pramuk, we have lost.....(puts on Dr Evil voice) two trillion dollars!
He explains:He explains:
The S&P Global Broad Market Index, which tracks global stock performance, has lost $2.23 trillion in market value this year. For perspective, the total trumps estimated U.S. student loan debt of more than $1 trillion and would represent roughly 12 percent of U.S. government debt.The S&P Global Broad Market Index, which tracks global stock performance, has lost $2.23 trillion in market value this year. For perspective, the total trumps estimated U.S. student loan debt of more than $1 trillion and would represent roughly 12 percent of U.S. government debt.
Global stock index has lost $2 TRILLION this year https://t.co/yeRLDioUxQ pic.twitter.com/8IWqGtPAVlGlobal stock index has lost $2 TRILLION this year https://t.co/yeRLDioUxQ pic.twitter.com/8IWqGtPAVl
But that might not capture the full scale of the rout. Bloomberg’s widest measure of listed companies shows a four trillion dollar loss:But that might not capture the full scale of the rout. Bloomberg’s widest measure of listed companies shows a four trillion dollar loss:
And there goes $4T...wiped off Bloomberg World Exchange Market Cap. That's more than Germany's annual GDP! #stocks pic.twitter.com/0XHEOB78O3And there goes $4T...wiped off Bloomberg World Exchange Market Cap. That's more than Germany's annual GDP! #stocks pic.twitter.com/0XHEOB78O3
7.58am GMT07:587.58am GMT07:58
The Financial Times also flags up that Beijing authorities appears to be buying shares today:The Financial Times also flags up that Beijing authorities appears to be buying shares today:
By lunch time the indices were up, amid reports that China’s state-backed funds were once again buying up sharesBy lunch time the indices were up, amid reports that China’s state-backed funds were once again buying up shares
On Thursday the securities regulator said that its promulgation of permanent rules restricting stock sales by large shareholders did not indicate that the “national team” is withdrawing from the market.On Thursday the securities regulator said that its promulgation of permanent rules restricting stock sales by large shareholders did not indicate that the “national team” is withdrawing from the market.
“Its market stability function will not change,” the agency said.“Its market stability function will not change,” the agency said.
The statement marks a shift in tone from late August, when the regulator said that the national team would halt regular share purchases.The statement marks a shift in tone from late August, when the regulator said that the national team would halt regular share purchases.
More here: China markets motor higher in choppy tradingMore here: China markets motor higher in choppy trading
7.28am GMT07:287.28am GMT07:28
Chinese market closes 2% higherChinese market closes 2% higher
Good morning from London, where City traders are arriving at their desks and looking nervously at developments in Asia overnight.Good morning from London, where City traders are arriving at their desks and looking nervously at developments in Asia overnight.
And the latest news is that the Chinese market has just closed up for the day.And the latest news is that the Chinese market has just closed up for the day.
The Shanghai composite index jumped 2%, or 61 points, to finish at 3,186 points, following the wild ride which Martin has been tracking through this blog.The Shanghai composite index jumped 2%, or 61 points, to finish at 3,186 points, following the wild ride which Martin has been tracking through this blog.
It does appear that China’s state-backed funds have been active in the market, buying up shares and giving retail investors a little confidence. Signs that Beijing has been intervening to support the yuan have helped shore up confidence too.It does appear that China’s state-backed funds have been active in the market, buying up shares and giving retail investors a little confidence. Signs that Beijing has been intervening to support the yuan have helped shore up confidence too.
Yesterday’s decision to abandon China’s new circuit-breaker rules has also paid off (they had been fuelling the crisis, as investors were rushing ditch shares before the market fell 7% and was shut for the day).Yesterday’s decision to abandon China’s new circuit-breaker rules has also paid off (they had been fuelling the crisis, as investors were rushing ditch shares before the market fell 7% and was shut for the day).
But it really has been a turbulent start to the year. China’s stock market has lost 10% of its value this week - the worst run since the Great Fall of China last summer.But it really has been a turbulent start to the year. China’s stock market has lost 10% of its value this week - the worst run since the Great Fall of China last summer.
#China's CSI300 closes up 2% at 3,361.56 points after volatile session. Down 9.9% for the week, worst since Aug2015. pic.twitter.com/55P4lsXBYK#China's CSI300 closes up 2% at 3,361.56 points after volatile session. Down 9.9% for the week, worst since Aug2015. pic.twitter.com/55P4lsXBYK
Updated at 7.38am GMTUpdated at 7.38am GMT
7.08am GMT07:087.08am GMT07:08
It’s time for me to sign off from Sydney and pass you over seamlessly to Graeme Wearden in London for what should be an interesting day.It’s time for me to sign off from Sydney and pass you over seamlessly to Graeme Wearden in London for what should be an interesting day.
Thanks for following us.Thanks for following us.
6.46am GMT06:466.46am GMT06:46
While not a great start to the year for the Japanese market.While not a great start to the year for the Japanese market.
6.45am GMT06:456.45am GMT06:45
This is how the European opening looks. Still a bit of a mixed bag.This is how the European opening looks. Still a bit of a mixed bag.
6.40am GMT06:406.40am GMT06:40
Associated Press has just put together a thought-provoking three reasons for concern about the Chinese economy.Associated Press has just put together a thought-provoking three reasons for concern about the Chinese economy.
6.24am GMT06:246.24am GMT06:24
Japan has just closed down at an estimated cost this week of $320bn in market capitalisation. Ouch.Japan has just closed down at an estimated cost this week of $320bn in market capitalisation. Ouch.
Better day so far in Shanghai and Shenzen as this chart on the CSI300.Better day so far in Shanghai and Shenzen as this chart on the CSI300.
While this picture of the yuan’s devaluation tells us the story from a different angle.While this picture of the yuan’s devaluation tells us the story from a different angle.
6.15am GMT06:156.15am GMT06:15
SUMMARY – another action-packed day on the Asian marketsSUMMARY – another action-packed day on the Asian markets
For a full story on the day’s developments so far, my colleague Tom Phillips has just filed this report from Beijing:For a full story on the day’s developments so far, my colleague Tom Phillips has just filed this report from Beijing:
Related: China stock markets buffeted amid enduring currency concernsRelated: China stock markets buffeted amid enduring currency concerns
5.52am GMT05:525.52am GMT05:52
In another snippet from Tom’s report, there are rumours that the head of the Chinese regulator, Xiao Gan, will be resigning tomorrow.In another snippet from Tom’s report, there are rumours that the head of the Chinese regulator, Xiao Gan, will be resigning tomorrow.
IG analyst Angus Nicholson said in a note today that:IG analyst Angus Nicholson said in a note today that:
Confidence in China’s ability to manage their capital markets has only been further damaged after they announced the removal of their “circuit breakers” after only being in place for four days (sending the market limit down 50% of the time) and rumours circulating that CSRC head Xiao Gang would be resigning tomorrow.Confidence in China’s ability to manage their capital markets has only been further damaged after they announced the removal of their “circuit breakers” after only being in place for four days (sending the market limit down 50% of the time) and rumours circulating that CSRC head Xiao Gang would be resigning tomorrow.
We’ll try to find out more about that as the day goes on.We’ll try to find out more about that as the day goes on.
5.39am GMT05:395.39am GMT05:39
In broader economic news, a strong jobs figure is expected from the US later today.In broader economic news, a strong jobs figure is expected from the US later today.
The magnificently named non-farm payrolls are due on Friday lunchtime US time and are expected to show that employers likely maintained a fairly strong pace of hiring in December.The magnificently named non-farm payrolls are due on Friday lunchtime US time and are expected to show that employers likely maintained a fairly strong pace of hiring in December.
Nonfarm payrolls probably increased by 200,000 jobs, just a slight step down from the 211,000 created in November, according to a Reuters survey of economists.Nonfarm payrolls probably increased by 200,000 jobs, just a slight step down from the 211,000 created in November, according to a Reuters survey of economists.
That puts unemployment at around 5% and might further calm market nerves. Also to some extent justifies the Federal Reserve decision to tighten monetary policy last month.That puts unemployment at around 5% and might further calm market nerves. Also to some extent justifies the Federal Reserve decision to tighten monetary policy last month.
Updated at 5.39am GMTUpdated at 5.39am GMT
5.32am GMT05:325.32am GMT05:32
Back to the Beijing competence theme with the Wall Street Journal weighing in...Back to the Beijing competence theme with the Wall Street Journal weighing in...
5.27am GMT05:275.27am GMT05:27
Australian shares close lowerAustralian shares close lower
The ASX/S&P 200 index has closed below 5000 points after a sixth straight session in the red.The benchmark was 19.5 points, or 0.39%, lower at 4,990.8, while the broader All Ordinaries index was down 19.4 points, or 0.38 per cent, at 5,049.4, Australian Associated Press reports.The ASX/S&P 200 index has closed below 5000 points after a sixth straight session in the red.The benchmark was 19.5 points, or 0.39%, lower at 4,990.8, while the broader All Ordinaries index was down 19.4 points, or 0.38 per cent, at 5,049.4, Australian Associated Press reports.
5.25am GMT05:255.25am GMT05:25
My colleague in Beijing, Tom Phillips, says China has mustered the “national team” to fight to avoid the kind of stock market turmoil that left president Xi Jinping embarrassed last year.My colleague in Beijing, Tom Phillips, says China has mustered the “national team” to fight to avoid the kind of stock market turmoil that left president Xi Jinping embarrassed last year.
Tom’s full report will be on the website soon but he quotes Christopher Balding, a professor of finance and economics at Peking University’s HSBC Business School, saying that Beijing’s economic flip-flopping and “wild swings in policymaking” had severely damaged confidence.Tom’s full report will be on the website soon but he quotes Christopher Balding, a professor of finance and economics at Peking University’s HSBC Business School, saying that Beijing’s economic flip-flopping and “wild swings in policymaking” had severely damaged confidence.
Chinese investors want very similar things that international investors want: they want clarity, they want to understand what is going on, they want to know what the policies are, they want stability and [to know] what the rules are.Chinese investors want very similar things that international investors want: they want clarity, they want to understand what is going on, they want to know what the policies are, they want stability and [to know] what the rules are.
The constant back-and-forth and changes just don’t engender confidence that Beijing has really any idea what they are doing.The constant back-and-forth and changes just don’t engender confidence that Beijing has really any idea what they are doing.
5.02am GMT05:025.02am GMT05:02
And here’s a European view:And here’s a European view:
5.01am GMT05:015.01am GMT05:01
European futures mixedEuropean futures mixed
A couple of hours to go before trading opens in Europe and it’s a mixed picture about what is going to happen there.A couple of hours to go before trading opens in Europe and it’s a mixed picture about what is going to happen there.
According to IG, the FTSE 100 will open up 13 points while the Dax in Geramy looks likely to open down 19 points.According to IG, the FTSE 100 will open up 13 points while the Dax in Geramy looks likely to open down 19 points.
4.47am GMT04:474.47am GMT04:47
Some straighter business news out of China today shows that demand for electric cars is growing.Some straighter business news out of China today shows that demand for electric cars is growing.
BYD, a Chinese carmaker backed by Warren Buffett’s conglomerate Berkshire Hathaway, raised its 2015 profit estimate to a five-year high, citing strong demand for its electric and plug-in hybrid vehicles, Reuters has reported. Government policy has helped boost demand, it said.BYD, a Chinese carmaker backed by Warren Buffett’s conglomerate Berkshire Hathaway, raised its 2015 profit estimate to a five-year high, citing strong demand for its electric and plug-in hybrid vehicles, Reuters has reported. Government policy has helped boost demand, it said.
Despite a slowing economy and volatile financial markets, Chinese automakers such as BYD and Geely Automobile Holdings have flagged bumper profits for 2015, boosted by favourable government policies and consumer preferences that stoked demand for their products.Despite a slowing economy and volatile financial markets, Chinese automakers such as BYD and Geely Automobile Holdings have flagged bumper profits for 2015, boosted by favourable government policies and consumer preferences that stoked demand for their products.
BYD said late on Thursday it expects net profit attributable to shareholders to climb between 518% and 557% for 2015, compared with an earlier forecast of a rise in the range of 435% to 481%.BYD said late on Thursday it expects net profit attributable to shareholders to climb between 518% and 557% for 2015, compared with an earlier forecast of a rise in the range of 435% to 481%.
4.32am GMT04:324.32am GMT04:32
Beijing has settled nerves – for nowBeijing has settled nerves – for now
Nerves do seem to have been settled by the PBOC’s yuan intervention/fix policy. The steps today to fix the yuan firmer and then get state-owned banks to prop up the offshore yuan value look contradictory in the light of previous days’ actions.Nerves do seem to have been settled by the PBOC’s yuan intervention/fix policy. The steps today to fix the yuan firmer and then get state-owned banks to prop up the offshore yuan value look contradictory in the light of previous days’ actions.
But in the absence of the circuit breaker it’s done the trick for now. The CSI300 and Shanghai Comp have paused for lunch up 2.75% and 2.39% respectively. The Nikkei is up a smidgeon but the ASX is still trailing at 0.53% downBut in the absence of the circuit breaker it’s done the trick for now. The CSI300 and Shanghai Comp have paused for lunch up 2.75% and 2.39% respectively. The Nikkei is up a smidgeon but the ASX is still trailing at 0.53% down
But Beijing’s policy still looks a bit cack-handed to some:But Beijing’s policy still looks a bit cack-handed to some:
4.13am GMT04:134.13am GMT04:13
It’s a good day for charts.It’s a good day for charts.
4.09am GMT04:094.09am GMT04:09
Expert opinion is quite divided about the state of play in China.Expert opinion is quite divided about the state of play in China.
Tian Weidong, analyst at Kaiyuan Securities in Shanghai put what might be described as the party line:Tian Weidong, analyst at Kaiyuan Securities in Shanghai put what might be described as the party line:
The market is back to normal Investors can buy and sell as they wish. Under the circuit breaker mechanism, the market was suffocated.The market is back to normal Investors can buy and sell as they wish. Under the circuit breaker mechanism, the market was suffocated.
But other were a little more nuanced in their assessment of a day’s trading that hs seen the Chinese markets climb back into positive territory despite the lack of circuit breaker.But other were a little more nuanced in their assessment of a day’s trading that hs seen the Chinese markets climb back into positive territory despite the lack of circuit breaker.
Mohamed El-Erian, the chief economic adviser at Allianz, said China’s decision to suspend a stock circuit breaker made sense, but the implementation and timing did not. China realized that it had very tight limits on the markets, he told Bloomberg, which did more harm than good.Mohamed El-Erian, the chief economic adviser at Allianz, said China’s decision to suspend a stock circuit breaker made sense, but the implementation and timing did not. China realized that it had very tight limits on the markets, he told Bloomberg, which did more harm than good.
They realised this, which is good news. The bad news is they took it off at a very peculiar time and did so without a whole set of compensating measures.They realised this, which is good news. The bad news is they took it off at a very peculiar time and did so without a whole set of compensating measures.
3.47am GMT03:473.47am GMT03:47
The mainland Chinese markets are coming up for their lunch break, so it’s a good time to check on the scoreboard.The mainland Chinese markets are coming up for their lunch break, so it’s a good time to check on the scoreboard.
Asia Pacific markets are all up, except Australia.Asia Pacific markets are all up, except Australia.
3.31am GMT03:313.31am GMT03:31
Metals dive again, but gold is a winnerMetals dive again, but gold is a winner
Oil may have rallied a bit but it’s still a poor outlook for prices of other industrial commodities.Oil may have rallied a bit but it’s still a poor outlook for prices of other industrial commodities.
London Copper has dropped 1% to $4,480 a tonne this afternoon, nearing 2009 lows. Nickel fell 2%, while lead and zinc eased nearly 1%.London Copper has dropped 1% to $4,480 a tonne this afternoon, nearing 2009 lows. Nickel fell 2%, while lead and zinc eased nearly 1%.
None of that is great for the Australian-Anglo mining behemoth BHP Billiton which is down again by 0.43% this afternoon on the Australian stock market.None of that is great for the Australian-Anglo mining behemoth BHP Billiton which is down again by 0.43% this afternoon on the Australian stock market.
Rio Tinto, which is not exposed to oil prices in the same way, is up more than 1.5%.Rio Tinto, which is not exposed to oil prices in the same way, is up more than 1.5%.
And Australian gold producers are doing well out of the chaos. The precious metal rose to a two-month high of $1,113.2, a gain of 4.9 percent so far this year.And Australian gold producers are doing well out of the chaos. The precious metal rose to a two-month high of $1,113.2, a gain of 4.9 percent so far this year.
3.19am GMT03:193.19am GMT03:19
Japan's finance minister warns on China interventionJapan's finance minister warns on China intervention
The Japanese finance minister Taro Aso has warned that the Chinese might find it hard to continue supporting the yuan given the decline in its foreign currency reserves revealed on Thursday.The Japanese finance minister Taro Aso has warned that the Chinese might find it hard to continue supporting the yuan given the decline in its foreign currency reserves revealed on Thursday.
Aso said Tokyo that further declines could trigger further capital flight from China and potentially set off competitive currency devaluations in other countries.Aso said Tokyo that further declines could trigger further capital flight from China and potentially set off competitive currency devaluations in other countries.
Foreign exchange reserves have already fallen this much due to China’s purchases of yuan to support its own currency, so it could be difficult to continue.Foreign exchange reserves have already fallen this much due to China’s purchases of yuan to support its own currency, so it could be difficult to continue.
China’s foreign exchange reserves fell $512.66 billion in 2015 to $3.33 trillion, central bank data showed on Thursday. $107.9 billion was accounted for in December alone.China’s foreign exchange reserves fell $512.66 billion in 2015 to $3.33 trillion, central bank data showed on Thursday. $107.9 billion was accounted for in December alone.
3.04am GMT03:043.04am GMT03:04
Reuters quotes a trader at a European bank in Shanghai that state-owned banks were offering dollar liquidity at 6.59 yuan per dollar in an attempt to push it higher.Reuters quotes a trader at a European bank in Shanghai that state-owned banks were offering dollar liquidity at 6.59 yuan per dollar in an attempt to push it higher.
But it’s confused picture, not helped by the difference in the onshore and offshore value of the yuan.But it’s confused picture, not helped by the difference in the onshore and offshore value of the yuan.
Reuters explains what happened after the PBOC set the yuan at 6.5636 today, with the currency moving towards that fix from an overnight close of 6.5929 backed by state-owned banks’ intervention:Reuters explains what happened after the PBOC set the yuan at 6.5636 today, with the currency moving towards that fix from an overnight close of 6.5929 backed by state-owned banks’ intervention:
The onshore yuan recovered to 6.5887 in morning trade, while the offshore yuan was about 1.4 percent weaker at 6.6798, narrowing a spread that reached around 2 percent a day earlier, making the central bank’s currency management task more complicated.The onshore yuan recovered to 6.5887 in morning trade, while the offshore yuan was about 1.4 percent weaker at 6.6798, narrowing a spread that reached around 2 percent a day earlier, making the central bank’s currency management task more complicated.
After its sharply lower fix on Thursday, the PBOC had later sown confusion by reportedly intervening heavily to defend the yuan in offshore trade, reversing a decline of more than 1 percent that took it to a record low of 6.7600 per dollar.After its sharply lower fix on Thursday, the PBOC had later sown confusion by reportedly intervening heavily to defend the yuan in offshore trade, reversing a decline of more than 1 percent that took it to a record low of 6.7600 per dollar.
That left dealers at a loss to know what the central bank’s aims were.That left dealers at a loss to know what the central bank’s aims were.
“The sharp drop has led to speculation that China is letting go of the reins on the CNY (yuan), or perhaps targeting faster depreciation to reach an ‘equilibrium’ level,” wrote analysts at Barclays, while conceding that no one was really sure.“The sharp drop has led to speculation that China is letting go of the reins on the CNY (yuan), or perhaps targeting faster depreciation to reach an ‘equilibrium’ level,” wrote analysts at Barclays, while conceding that no one was really sure.
2.42am GMT02:422.42am GMT02:42
BREAKING – Chinese central bank intervening to support yuan - ReutersBREAKING – Chinese central bank intervening to support yuan - Reuters
The Chinese central bank, the PBOC, is intervening to support the yuan, according to Reuters.The Chinese central bank, the PBOC, is intervening to support the yuan, according to Reuters.
2.37am GMT02:372.37am GMT02:37
Oil rises off 12-year lowsOil rises off 12-year lows
The global oil benchmark, Brent crude, has rallied 2% today after China boosted the yuan.The global oil benchmark, Brent crude, has rallied 2% today after China boosted the yuan.
Brent had risen 56 cents to $34.31 a barrel as of 12.50 AEDT (0150 GMT), having hit $34.72 earlier. It settled down 48 cents at $33.75 in the previous session, after marking $32.16, a level last seen in April 2004.Brent had risen 56 cents to $34.31 a barrel as of 12.50 AEDT (0150 GMT), having hit $34.72 earlier. It settled down 48 cents at $33.75 in the previous session, after marking $32.16, a level last seen in April 2004.
US crude was trading 63c higher at $33.90 a barrel.US crude was trading 63c higher at $33.90 a barrel.
2.32am GMT02:322.32am GMT02:32
SUMMARYSUMMARY
It’s not easy to keep track this morning but here are the main points.It’s not easy to keep track this morning but here are the main points.
Updated at 2.43am GMTUpdated at 2.43am GMT
2.18am GMT02:182.18am GMT02:18
It should be said at this point that the volatility of the Chinese markets is much more significant for what it tells us about policy-making in Beijing than the intrinsic importance of the numbers. Most people accept that the share prices in China are totally overvalued and must be allowed to fall. But it’s the disorderly manner in which this is happening which makes it interesting.It should be said at this point that the volatility of the Chinese markets is much more significant for what it tells us about policy-making in Beijing than the intrinsic importance of the numbers. Most people accept that the share prices in China are totally overvalued and must be allowed to fall. But it’s the disorderly manner in which this is happening which makes it interesting.
My colleague Nils Pratley wrote on Monday that Beijing risked making the same mistakes this week as they did in the northern summer by stopping prices finding their natural level.My colleague Nils Pratley wrote on Monday that Beijing risked making the same mistakes this week as they did in the northern summer by stopping prices finding their natural level.
Read what Nils had to say here. It’s pretty much come to pass:Read what Nils had to say here. It’s pretty much come to pass:
Related: Investors nervous as China looks set to repeat mistakes of last summerRelated: Investors nervous as China looks set to repeat mistakes of last summer
1.59am GMT01:591.59am GMT01:59
Are you keeping up at the back?Are you keeping up at the back?
It’s a confused picture today and no mistake. The chart in this tweet is quite helpful though. Thanks to Patrick McGee of the FT.It’s a confused picture today and no mistake. The chart in this tweet is quite helpful though. Thanks to Patrick McGee of the FT.
1.56am GMT01:561.56am GMT01:56
Traders were following China’s lead upwards. But the Chinese markets are all over the place. After an early rally, the Shanghai Composite index and the CSI300 index of leading shares are heading south again.Traders were following China’s lead upwards. But the Chinese markets are all over the place. After an early rally, the Shanghai Composite index and the CSI300 index of leading shares are heading south again.
How low will they go?How low will they go?
1.46am GMT01:461.46am GMT01:46
Australian retail sales meet expectationsAustralian retail sales meet expectations
Decent Australian retail sales for November helped boost the ASX.Decent Australian retail sales for November helped boost the ASX.
They were up 0.4% boosted by a 1% rise in the cafes and restaurants category, yet proof if any were needed that Australians just love to eat out. Household goods sales increased by 0.9%.They were up 0.4% boosted by a 1% rise in the cafes and restaurants category, yet proof if any were needed that Australians just love to eat out. Household goods sales increased by 0.9%.
Total retail spending was $24.77bn in November, up from $24.66bn in October, the Australian Bureau of Statistics said.Total retail spending was $24.77bn in November, up from $24.66bn in October, the Australian Bureau of Statistics said.
1.37am GMT01:371.37am GMT01:37
Stock markets rally across Asia Pacific.Stock markets rally across Asia Pacific.
Stock markets have rallied across Asia Pacific.Stock markets have rallied across Asia Pacific.
The Nikkei is down just 0.24%, while the ASX/S&P 200 in Australia is now into positive territory.The Nikkei is down just 0.24%, while the ASX/S&P 200 in Australia is now into positive territory.
1.35am GMT01:351.35am GMT01:35
It’s the first time the PBOC has fixed the yuan stronger in nine days. A lower number equals a stronger fix because it relates to what it takes to buy one US dollar.It’s the first time the PBOC has fixed the yuan stronger in nine days. A lower number equals a stronger fix because it relates to what it takes to buy one US dollar.
The People’s Bank of China set the midpoint rate at 6.5636 per dollar prior to market open, firmer than the previous fix of 6.5646, and firmer than the previous day’s closing quote 6.5929.The People’s Bank of China set the midpoint rate at 6.5636 per dollar prior to market open, firmer than the previous fix of 6.5646, and firmer than the previous day’s closing quote 6.5929.
That is the first time the PBOC has firmed the midpoint against the dollar in 9 trading days, after it allowed the biggest fall in the yuan in five months on Thursday, pressuring regional currencies and sending global stock markets tumbling as investors feared it would trigger competitive devaluations.That is the first time the PBOC has firmed the midpoint against the dollar in 9 trading days, after it allowed the biggest fall in the yuan in five months on Thursday, pressuring regional currencies and sending global stock markets tumbling as investors feared it would trigger competitive devaluations.
Updated at 1.35am GMTUpdated at 1.35am GMT
1.27am GMT01:271.27am GMT01:27
Aussie dollar gains almost half a cent.Aussie dollar gains almost half a cent.
The Australian dollar is an immediate beneficiary of this stronger yuan fix.The Australian dollar is an immediate beneficiary of this stronger yuan fix.
The Aussie has gained almost half a cent in the last 10 minutes and is now buying US70.60c.The Aussie has gained almost half a cent in the last 10 minutes and is now buying US70.60c.
Equities following upwards.Equities following upwards.
1.24am GMT01:241.24am GMT01:24
The yuan fix is a good deal more stabilising than previous ones this week.The yuan fix is a good deal more stabilising than previous ones this week.
Last night’s close was 6.5929 to the US dollar which means the PBOC has opted for a more confidence-boosting currency level for now.Last night’s close was 6.5929 to the US dollar which means the PBOC has opted for a more confidence-boosting currency level for now.
1.20am GMT01:201.20am GMT01:20
Yuan fixed at 6.5636Yuan fixed at 6.5636
Yuan fixed at 6.5636Yuan fixed at 6.5636
1.17am GMT01:171.17am GMT01:17
Only a few minutes before the People’s Bank of China announces today’s fix for the yuan. A weaker than expected fix has twice triggered market crashes this week so this is going to be a key moment.Only a few minutes before the People’s Bank of China announces today’s fix for the yuan. A weaker than expected fix has twice triggered market crashes this week so this is going to be a key moment.
Yesterday China published figures for foreign reserves which showed it was burning through cash to prop up the yuan. So will they stick or twist today?Yesterday China published figures for foreign reserves which showed it was burning through cash to prop up the yuan. So will they stick or twist today?
1.10am GMT01:101.10am GMT01:10
Introduction: Asia Pacific markets on the slide againIntroduction: Asia Pacific markets on the slide again
Good morning and welcome to the live blog. It’s been another lively morning on the financial markets and it’s tense ahead of the opening of the Chinese mainland markets at 12.30 AEDT.Good morning and welcome to the live blog. It’s been another lively morning on the financial markets and it’s tense ahead of the opening of the Chinese mainland markets at 12.30 AEDT.
The Chinese regulator has scrapped its controversial “circuit-breaker” mechanism which has been triggered twice this week when losses hit 7%, forcing the markets to cease trading.The Chinese regulator has scrapped its controversial “circuit-breaker” mechanism which has been triggered twice this week when losses hit 7%, forcing the markets to cease trading.
Added to the continued devaluation of the yuan, traders around the world have drawn the conclusion that the Chinese authorities know something about the state of their economy that fairly rosy official figures are not showing.Added to the continued devaluation of the yuan, traders around the world have drawn the conclusion that the Chinese authorities know something about the state of their economy that fairly rosy official figures are not showing.
So will prices be allowed to fall to a fair value after six months of restrictions on sales? Or will the state instead intervene with mass buying of stocks? Perhaps they will try to moderate the yuan’s recent devaluation in order to boost confidence?So will prices be allowed to fall to a fair value after six months of restrictions on sales? Or will the state instead intervene with mass buying of stocks? Perhaps they will try to moderate the yuan’s recent devaluation in order to boost confidence?
Meanwhile, the market in Australia – always the first major market to face the new ball, as it were – has fallen more than 1%.Meanwhile, the market in Australia – always the first major market to face the new ball, as it were – has fallen more than 1%.
More here:More here:
Related: Australian share market plunges below 5,000 points amid China fearsRelated: Australian share market plunges below 5,000 points amid China fears