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China closes 2% higher while US job figures beat forecasts – live China closes 2% higher but other markets fall after US jobs data – live
(35 minutes later)
4.10pm GMT16:104.10pm GMT16:10
One of the reasons for the decline in markets since the initial enthusiasm for the US jobs data is the feeling that the strong figures make a rate rise more likely. The disappointing wages growth might mitigate against an early rise, but the general feeling seems to be that even dearer borrowing costs are now more likely. Chris Beauchamp, senior market analyst at IG, said:One of the reasons for the decline in markets since the initial enthusiasm for the US jobs data is the feeling that the strong figures make a rate rise more likely. The disappointing wages growth might mitigate against an early rise, but the general feeling seems to be that even dearer borrowing costs are now more likely. Chris Beauchamp, senior market analyst at IG, said:
Heading into the close, the FTSE 100 has given up all its gains for the day, finishing a tough week on a miserable note.Heading into the close, the FTSE 100 has given up all its gains for the day, finishing a tough week on a miserable note.
After a passable performance overnight for the Chinese market, hopes were high that stock markets in Europe and the US could claw back some of their own losses. So far on this side of the pond, that has not been the case.After a passable performance overnight for the Chinese market, hopes were high that stock markets in Europe and the US could claw back some of their own losses. So far on this side of the pond, that has not been the case.
Equity traders have been left bereft of reasons to be optimistic this week, and it looks like the China fears of the past few days will remain with us as we head into a new week. US job numbers kicked off 2016 in fine form, well ahead of estimates, but the lack of wage growth was the fly in the ointment. The fear now is that such good numbers, even with inflation worries, will encourage the Fed to continue with its planned four hikes this year, putting fresh pressure on equity markets.Equity traders have been left bereft of reasons to be optimistic this week, and it looks like the China fears of the past few days will remain with us as we head into a new week. US job numbers kicked off 2016 in fine form, well ahead of estimates, but the lack of wage growth was the fly in the ointment. The fear now is that such good numbers, even with inflation worries, will encourage the Fed to continue with its planned four hikes this year, putting fresh pressure on equity markets.
3.36pm GMT15:363.36pm GMT15:36
Larry ElliottLarry Elliott
Here’s our economics editor Larry Elliott on the US jobs data:Here’s our economics editor Larry Elliott on the US jobs data:
It seems just like the good old days. Almost 300,000 jobs were added to payrolls in America in the last month of 2015, continuing the upward trend of recent months. The US is once again living up to its reputation for being a gigantic jobs machine.It seems just like the good old days. Almost 300,000 jobs were added to payrolls in America in the last month of 2015, continuing the upward trend of recent months. The US is once again living up to its reputation for being a gigantic jobs machine.
Well, perhaps. Jobs are certainly being created at a good lick and the US has an unemployment rate – 5% – that the eurozone, at 10.5%, would die for. There are signs that people who had given up hope of finding work are being encouraged back into the labour market.Well, perhaps. Jobs are certainly being created at a good lick and the US has an unemployment rate – 5% – that the eurozone, at 10.5%, would die for. There are signs that people who had given up hope of finding work are being encouraged back into the labour market.
Inevitably, this will lead to speculation that the Federal Reserve has left it too late to start raising interest rates and will now be forced to play catch up with a more rapid increase in the cost of borrowing than Wall Street is expecting. There is already talk of the Fed repeating December’s rate hike in March.Inevitably, this will lead to speculation that the Federal Reserve has left it too late to start raising interest rates and will now be forced to play catch up with a more rapid increase in the cost of borrowing than Wall Street is expecting. There is already talk of the Fed repeating December’s rate hike in March.
The markets may be getting ahead of themselves. Employment and unemployment are lagging indicators: they provide a guide to what has happened to an economy in the past rather than what is happening now or what will happen in the future. Some of the forward-looking indicators – for manufacturing, for example – have been worryingly weak.The markets may be getting ahead of themselves. Employment and unemployment are lagging indicators: they provide a guide to what has happened to an economy in the past rather than what is happening now or what will happen in the future. Some of the forward-looking indicators – for manufacturing, for example – have been worryingly weak.
The Fed will certainly be looking closely at the rate of job creation in the US, but it is equally interested in what is happening to wages. And the story here is that pay pressures are extremely muted. Average hourly earnings were flat in December and were up by just 2.5% over the year as a whole, a much weaker outcome than Wall Street had been anticipating.The Fed will certainly be looking closely at the rate of job creation in the US, but it is equally interested in what is happening to wages. And the story here is that pay pressures are extremely muted. Average hourly earnings were flat in December and were up by just 2.5% over the year as a whole, a much weaker outcome than Wall Street had been anticipating.
His full analysis is here:His full analysis is here:
Related: US employment is up, wages are static. Ring any bells?Related: US employment is up, wages are static. Ring any bells?
3.30pm GMT15:303.30pm GMT15:30
Markets are flagging after the initial burst of enthusiasm following the US jobs data. On Wall Street the Dow Jones Industrial Average is now up 51 points, the FTSE 100 is just 2 points higher while Germany’s Dax is down 42 points.Markets are flagging after the initial burst of enthusiasm following the US jobs data. On Wall Street the Dow Jones Industrial Average is now up 51 points, the FTSE 100 is just 2 points higher while Germany’s Dax is down 42 points.
Connor Campbell, financial analyst at Spreadex, said:Connor Campbell, financial analyst at Spreadex, said:
Initially buoyed by a bombastic non-farm figure the global indices couldn’t sustain their surge, the US open ending up not being the white knight the European markets were looking for.Initially buoyed by a bombastic non-farm figure the global indices couldn’t sustain their surge, the US open ending up not being the white knight the European markets were looking for.
Perhaps the superb non-farm figure (at 292,000 against the 203,000 expected and an upwards revised 252,000 last month) was tempered by falling wage growth (at 0.0% against the 0.2% forecast) and an unchanged unemployment rate. Or perhaps investors aren’t willing to take too much risk into the weekend, especially with the prospect of another awful start to Monday on the cards. Either way the Dow couldn’t manage to match the gains its futures were promising, at points flagging in the same way the European indices have done for much of the day.Perhaps the superb non-farm figure (at 292,000 against the 203,000 expected and an upwards revised 252,000 last month) was tempered by falling wage growth (at 0.0% against the 0.2% forecast) and an unchanged unemployment rate. Or perhaps investors aren’t willing to take too much risk into the weekend, especially with the prospect of another awful start to Monday on the cards. Either way the Dow couldn’t manage to match the gains its futures were promising, at points flagging in the same way the European indices have done for much of the day.
Chinese inflation figures are due over the weekend which could prompt further market ructions next week, given what has happened in the past few days.Chinese inflation figures are due over the weekend which could prompt further market ructions next week, given what has happened in the past few days.
3.09pm GMT15:093.09pm GMT15:09
Here’s something to put the latest US jobs figures in context:Here’s something to put the latest US jobs figures in context:
US Unemployment Rate Dec 2015: 5% Dec 2007: 5% Full Time Jobs 2015: 122.8m 2008: 123.2m Population +15m BLS data (2)US Unemployment Rate Dec 2015: 5% Dec 2007: 5% Full Time Jobs 2015: 122.8m 2008: 123.2m Population +15m BLS data (2)
3.03pm GMT15:033.03pm GMT15:03
Back with China, and here’s a graphic showing all the recent intervention in the country’s stock market:Back with China, and here’s a graphic showing all the recent intervention in the country’s stock market:
What else can the PBOC do? 🤔 How China has intervened in its stock market: https://t.co/EzMRSeYKRf $ASHR $FXI pic.twitter.com/1grfJwMHMqWhat else can the PBOC do? 🤔 How China has intervened in its stock market: https://t.co/EzMRSeYKRf $ASHR $FXI pic.twitter.com/1grfJwMHMq
2.58pm GMT14:582.58pm GMT14:58
IG’s Joshua Mahony is not surprised by the fluctuations in the dollar following the non-farm payroll report:IG’s Joshua Mahony is not surprised by the fluctuations in the dollar following the non-farm payroll report:
That dollar rally didnt last too long. Fully expected to see any big move revert back to square one as is so often the case on jobs day #NFPThat dollar rally didnt last too long. Fully expected to see any big move revert back to square one as is so often the case on jobs day #NFP
Updated at 2.58pm GMTUpdated at 2.58pm GMT
2.55pm GMT14:552.55pm GMT14:55
But not everyone agrees. Economist Nina Skero at the Centre for Economics and Business Research does expect a US rate rise, but perhaps not until the third quarter of the year:But not everyone agrees. Economist Nina Skero at the Centre for Economics and Business Research does expect a US rate rise, but perhaps not until the third quarter of the year:
Overall, the data add to the view that the US economic recovery steams ahead as wage gains and the unemployment rate approach long-run norms and as job creation figures, which admittedly can be rather volatile, remain high.Overall, the data add to the view that the US economic recovery steams ahead as wage gains and the unemployment rate approach long-run norms and as job creation figures, which admittedly can be rather volatile, remain high.
In the aftermath of December’s historic Federal Open Market Committee decision and this week’s data releases perhaps the question on the minds of many is what is the future of US monetary policy? It is important to keep in mind that as one swallow does not a summer make, one rate hike does not a normalized monetary policy make. Even with the December rise interest rates in the US remain low and although the committee has restated its intention to maintain an accommodative monetary policy, it is reasonable to expect further hikes in 2016 – an expectation further strengthened by today’s strong labour market data.In the aftermath of December’s historic Federal Open Market Committee decision and this week’s data releases perhaps the question on the minds of many is what is the future of US monetary policy? It is important to keep in mind that as one swallow does not a summer make, one rate hike does not a normalized monetary policy make. Even with the December rise interest rates in the US remain low and although the committee has restated its intention to maintain an accommodative monetary policy, it is reasonable to expect further hikes in 2016 – an expectation further strengthened by today’s strong labour market data.
However, this is not to say that sources of risk which could slow down the recovery do not exist, both domestically and globally. Today’s labour-market release shows a participation rate of 62.6% - well below pre-crisis levels. On the global front, equity markets turmoil and the slowdown in China are among the greatest concerns.However, this is not to say that sources of risk which could slow down the recovery do not exist, both domestically and globally. Today’s labour-market release shows a participation rate of 62.6% - well below pre-crisis levels. On the global front, equity markets turmoil and the slowdown in China are among the greatest concerns.
The exact pace and extent of further interest rate hikes is difficult to predict given that the FOMC itself maintains that it is data-dependent and that it will continue to make interest rate decisions based on a series of indicators that it is monitoring rather than on a pre-set schedule.The exact pace and extent of further interest rate hikes is difficult to predict given that the FOMC itself maintains that it is data-dependent and that it will continue to make interest rate decisions based on a series of indicators that it is monitoring rather than on a pre-set schedule.
Keeping in mind that the US economy is expected to perform strongly in 2016, but also that December minutes show that the FOMC wants to observe the potentially delayed impact of the rate rise before making further hikes, Cebr expects interest rates to rise to 0.75% in the third quarter of 2016.Keeping in mind that the US economy is expected to perform strongly in 2016, but also that December minutes show that the FOMC wants to observe the potentially delayed impact of the rate rise before making further hikes, Cebr expects interest rates to rise to 0.75% in the third quarter of 2016.
2.48pm GMT14:482.48pm GMT14:48
Here’s someone who thinks the Federal Reserve could raise US interest rates at its March meeting despite the uninspiring wage data. Harm Bandholz, chief US economist at UniCredit Research said:Here’s someone who thinks the Federal Reserve could raise US interest rates at its March meeting despite the uninspiring wage data. Harm Bandholz, chief US economist at UniCredit Research said:
Average hourly earnings were only flat between November and December. But thanks to a positive basis effect, the year on year rate ticked up to 2.5% from 2.3%. But while the Fed has said at a number of recent occasions that it puts more emphasis on the actual development of inflation rates when determining the appropriate path for short-term interest rates, we think that the unambiguous display of strength in the labor market will continue to bolster the confidence of FOMC members that (a) consumer spending will continue to power the US economy ahead – despite global headwinds, and (b) that faster wage gains will eventually lift domestic inflation rates. Accordingly, we continue to expect three rate hikes for 2016, with the next one coming at the March meeting.Average hourly earnings were only flat between November and December. But thanks to a positive basis effect, the year on year rate ticked up to 2.5% from 2.3%. But while the Fed has said at a number of recent occasions that it puts more emphasis on the actual development of inflation rates when determining the appropriate path for short-term interest rates, we think that the unambiguous display of strength in the labor market will continue to bolster the confidence of FOMC members that (a) consumer spending will continue to power the US economy ahead – despite global headwinds, and (b) that faster wage gains will eventually lift domestic inflation rates. Accordingly, we continue to expect three rate hikes for 2016, with the next one coming at the March meeting.
On the jobs numbers themselves he said:On the jobs numbers themselves he said:
To be sure, the labor market in the fourth quarter of 2015 most likely benefited from two special factors. First, there was a technical rebound in October, after the August and September numbers disappointed (in part due to seasonal adjustment issues). And in November and December, the unusually mild winter weather clearly supported employment in weather-sensitive areas, notably construction.To be sure, the labor market in the fourth quarter of 2015 most likely benefited from two special factors. First, there was a technical rebound in October, after the August and September numbers disappointed (in part due to seasonal adjustment issues). And in November and December, the unusually mild winter weather clearly supported employment in weather-sensitive areas, notably construction.
There is, however, in our view no reason at all to question the underlying message of today’s and the previous couple of employment reports: The US labor market continues to be red-hot despite daily reports of global economic headwinds and financial market turmoil. The reason for this resilience – as highlighted at several occasions – is that most of the value added and of the job creation in the US occurs in the services sector, which is barely affected by global developments. And this trend strengthened further in 2015. After in 2014 81% of jobs were created in services, this number rose to a whopping 94% in 2015; with another 10% coming from the construction sector! That leaves a very small share of the labor market exposed to the adverse impacts of global economic headwinds and low oil prices.There is, however, in our view no reason at all to question the underlying message of today’s and the previous couple of employment reports: The US labor market continues to be red-hot despite daily reports of global economic headwinds and financial market turmoil. The reason for this resilience – as highlighted at several occasions – is that most of the value added and of the job creation in the US occurs in the services sector, which is barely affected by global developments. And this trend strengthened further in 2015. After in 2014 81% of jobs were created in services, this number rose to a whopping 94% in 2015; with another 10% coming from the construction sector! That leaves a very small share of the labor market exposed to the adverse impacts of global economic headwinds and low oil prices.
2.33pm GMT14:332.33pm GMT14:33
#Commodities (even #gold) unfazed by strong US jobs report: big #NFP gains suggest growth fears overdone, but wage data won't yet worry Fed.#Commodities (even #gold) unfazed by strong US jobs report: big #NFP gains suggest growth fears overdone, but wage data won't yet worry Fed.
2.33pm GMT14:332.33pm GMT14:33
Wall Street opens higherWall Street opens higher
As expected after the better than expected US jobs figures, Wall Street has moved ahead in early trading.As expected after the better than expected US jobs figures, Wall Street has moved ahead in early trading.
The Dow Jones Industrial Average has added 110 points or 0.6% while the S&P 500 is up 0.4% and the Nasdaq 0.7%.The Dow Jones Industrial Average has added 110 points or 0.6% while the S&P 500 is up 0.4% and the Nasdaq 0.7%.
2.25pm GMT14:252.25pm GMT14:25
Here’s our story on the US non-farm payrolls:Here’s our story on the US non-farm payrolls:
Related: US jobs report: economy adds 292,000 positions in strong finish to 2015Related: US jobs report: economy adds 292,000 positions in strong finish to 2015
2.24pm GMT14:242.24pm GMT14:24
More detail on the US jobs:More detail on the US jobs:
On the mining sector, the Bureau of Labor Statistics said:On the mining sector, the Bureau of Labor Statistics said:
Employment in mining continued to decline in December (-8,000). After adding 41,000 jobs in 2014, mining lost 129,000 jobs in 2015, with most of the loss in support activities for mining.Employment in mining continued to decline in December (-8,000). After adding 41,000 jobs in 2014, mining lost 129,000 jobs in 2015, with most of the loss in support activities for mining.
Updated at 2.29pm GMTUpdated at 2.29pm GMT
2.18pm GMT14:182.18pm GMT14:18
Further consideration of the wages data - and the implications for the Federal Reserve to hold fire on another rate rise - has seen the dollar lose some of its initial strength in the wake of the figures.Further consideration of the wages data - and the implications for the Federal Reserve to hold fire on another rate rise - has seen the dollar lose some of its initial strength in the wake of the figures.
Against the pound, the US currency is at $1.4572 compared to $1.4556 earlier.Against the pound, the US currency is at $1.4572 compared to $1.4556 earlier.
2.11pm GMT14:112.11pm GMT14:11
On the wages figures, Alex Lydall at Foenix Partners said:On the wages figures, Alex Lydall at Foenix Partners said:
Not all components were positive in today’s payroll print with Average Hourly Earnings being a particular concern falling 0.2% below forecasts. More jobs being created can only be seen as good news, but with hourly earnings lagging, labour cost inflation is still a slight concern to Janet Yellen.Not all components were positive in today’s payroll print with Average Hourly Earnings being a particular concern falling 0.2% below forecasts. More jobs being created can only be seen as good news, but with hourly earnings lagging, labour cost inflation is still a slight concern to Janet Yellen.
2.09pm GMT14:092.09pm GMT14:09
The strong payrolls number has vindicated the Federal Reserve’s decision to raise rates in December, said Rob Carnell at ING Bank, but the next increase may not come until June. He said:The strong payrolls number has vindicated the Federal Reserve’s decision to raise rates in December, said Rob Carnell at ING Bank, but the next increase may not come until June. He said:
However, aside from this strong headline, there is not much else to get too excited about. The unemployment rate stood unchanged at 5.0%, still very low by any standards.However, aside from this strong headline, there is not much else to get too excited about. The unemployment rate stood unchanged at 5.0%, still very low by any standards.
One considerable disappointment in this survey, and perhaps a more important one as far as the pace of future fed hikes is concerned, is the wages figures. These grew at only a 2.5% year on year rise, and were flat over the month in December. Consensus had been looking for a modest 0.2% month on month increase, which would have taken wages into a range they had not inhabited since before the financial crisis. Instead, wages still seem to be struggling to rise. There was also no change in the average workweek, which tends to support the notion that wage pressures remain subdued, as increased hours frequently indicate a tight labour market and building wage pressures.One considerable disappointment in this survey, and perhaps a more important one as far as the pace of future fed hikes is concerned, is the wages figures. These grew at only a 2.5% year on year rise, and were flat over the month in December. Consensus had been looking for a modest 0.2% month on month increase, which would have taken wages into a range they had not inhabited since before the financial crisis. Instead, wages still seem to be struggling to rise. There was also no change in the average workweek, which tends to support the notion that wage pressures remain subdued, as increased hours frequently indicate a tight labour market and building wage pressures.
Consequently, and even with the strong headline payrolls figure, we don’t think these figures support a March rate hike, talk of which had been building over the past week following strong non-manufacturing ISM and ADP data. Our house forecast for the next hike in June is still, we think, a more likely outcome.Consequently, and even with the strong headline payrolls figure, we don’t think these figures support a March rate hike, talk of which had been building over the past week following strong non-manufacturing ISM and ADP data. Our house forecast for the next hike in June is still, we think, a more likely outcome.
Updated at 3.59pm GMTUpdated at 3.59pm GMT
2.04pm GMT14:042.04pm GMT14:04
Wages in the US were also on the rise, the figures show, but perhaps not enough for another interest rate hike at the Federal Reserve’s next meeting.Wages in the US were also on the rise, the figures show, but perhaps not enough for another interest rate hike at the Federal Reserve’s next meeting.
The year on year gain was 2.5% in December compares to 2.3% in November, and is expected to pick up further as employment increases. However the average hourly earnings figure dropped a cent in December.The year on year gain was 2.5% in December compares to 2.3% in November, and is expected to pick up further as employment increases. However the average hourly earnings figure dropped a cent in December.
Updated at 2.50pm GMTUpdated at 2.50pm GMT
1.57pm GMT13:571.57pm GMT13:57
The full US jobs report is here.The full US jobs report is here.
1.55pm GMT13:551.55pm GMT13:55
Here are the charts showing the US job gains and unemployment rate:Here are the charts showing the US job gains and unemployment rate:
1.40pm GMT13:401.40pm GMT13:40
The jobs data may well have vindicated the Fed’s rate decision, but there is no reason to be complacent, suggests Dennis de Jong, managing director at UFX.com. He said:The jobs data may well have vindicated the Fed’s rate decision, but there is no reason to be complacent, suggests Dennis de Jong, managing director at UFX.com. He said:
It’s far too soon to know definitively if Fed Chair Janet Yellen and Co. made the right decision in raising interest rates last month. However, December’s well above expected non-farm payroll figures will confirm her assessment that the world’s biggest economy is in rude health.It’s far too soon to know definitively if Fed Chair Janet Yellen and Co. made the right decision in raising interest rates last month. However, December’s well above expected non-farm payroll figures will confirm her assessment that the world’s biggest economy is in rude health.
Despite the positive jobs figures, there are plenty of challenges on the horizon for Yellen to navigate, not least depressed oil prices and the Chinese economy playing havoc with exchanges the world over. Observers will be hoping that next week’s US retail sales figures show a bumper holiday trading period.Despite the positive jobs figures, there are plenty of challenges on the horizon for Yellen to navigate, not least depressed oil prices and the Chinese economy playing havoc with exchanges the world over. Observers will be hoping that next week’s US retail sales figures show a bumper holiday trading period.
Updated at 1.57pm GMTUpdated at 1.57pm GMT
1.37pm GMT13:371.37pm GMT13:37
The better than expected US jobs data could well prompt further rate rises this year, and this has pushed the dollar higher again.The better than expected US jobs data could well prompt further rate rises this year, and this has pushed the dollar higher again.
Sterling has hit the day’s low of $1.4556 , down from $1.4590 beforehand, while the euro has fallen around 1%.Sterling has hit the day’s low of $1.4556 , down from $1.4590 beforehand, while the euro has fallen around 1%.
Markets seem to like the news. The FTSE 100 is now up 47 points and is back over 6000, Germany’s Dax has climbed 0.3% and France’s Cac has come off its lows, down 0.16%.Markets seem to like the news. The FTSE 100 is now up 47 points and is back over 6000, Germany’s Dax has climbed 0.3% and France’s Cac has come off its lows, down 0.16%.
US futures are now showing a 147 point opening on the Dow Jones Industrial Average.US futures are now showing a 147 point opening on the Dow Jones Industrial Average.
Updated at 1.44pm GMTUpdated at 1.44pm GMT
1.32pm GMT13:321.32pm GMT13:32
The jobless rate however has come in line with forecasts at 5%.The jobless rate however has come in line with forecasts at 5%.
1.31pm GMT13:311.31pm GMT13:31
November’s jobs figure has been revised up from 211,000 to 252,000 and October’s from 298,000 to 307,000.November’s jobs figure has been revised up from 211,000 to 252,000 and October’s from 298,000 to 307,000.
1.30pm GMT13:301.30pm GMT13:30
US jobs beat expectationsUS jobs beat expectations
The non-farm payroll numbers for December showed a 292,000 rise compared to expectations of 200,000.The non-farm payroll numbers for December showed a 292,000 rise compared to expectations of 200,000.
That seems to back up the Federal Reserve’s decision to raise interest rates last month.That seems to back up the Federal Reserve’s decision to raise interest rates last month.
1.29pm GMT13:291.29pm GMT13:29
Unless we added more than 500,000 new #jobs in December, 2015 will mark a slowdown in job growth from 2014.Unless we added more than 500,000 new #jobs in December, 2015 will mark a slowdown in job growth from 2014.
1.27pm GMT13:271.27pm GMT13:27
Our Financial editor, Nils Pratley, has kicked the tires on Sports Direct’s profit warning.Our Financial editor, Nils Pratley, has kicked the tires on Sports Direct’s profit warning.
His verdict - the City is changing its view of Mike Ashley’s empire, fast. And can the weather really be blamed?His verdict - the City is changing its view of Mike Ashley’s empire, fast. And can the weather really be blamed?
Should a mild winter really upset trading at a sportswear chain? Sports Direct is not in the coats and jumpers business in the way that Marks & Spencer and Next are. Warm temperatures, in theory, might even encourage better sales of trainers and tracksuits than freezing conditions.Should a mild winter really upset trading at a sportswear chain? Sports Direct is not in the coats and jumpers business in the way that Marks & Spencer and Next are. Warm temperatures, in theory, might even encourage better sales of trainers and tracksuits than freezing conditions.
Doesn’t Sports Direct have a strong online business to capture the switch to online shopping? And surely the weather hasn’t changed radically since management said four weeks ago it remained confident of achieving top-line profits of £420m in the current financial year; now it says anything between £380m and £420m is possible.Doesn’t Sports Direct have a strong online business to capture the switch to online shopping? And surely the weather hasn’t changed radically since management said four weeks ago it remained confident of achieving top-line profits of £420m in the current financial year; now it says anything between £380m and £420m is possible.
Related: Sports Direct's story of easy growth seems to be overRelated: Sports Direct's story of easy growth seems to be over
1.21pm GMT13:211.21pm GMT13:21
After this turbulent week, many in the City and on Wall Street just hope the US jobs report will be undramatic:After this turbulent week, many in the City and on Wall Street just hope the US jobs report will be undramatic:
Sighs of relief #NFPGuessesSighs of relief #NFPGuesses
1.15pm GMT13:151.15pm GMT13:15
It’s nearly time for the final major piece of economic data of the week -- the latest US jobs report for December.It’s nearly time for the final major piece of economic data of the week -- the latest US jobs report for December.
Economists expect around 200,000 new jobs were created last month:Economists expect around 200,000 new jobs were created last month:
On a normal week, the Non-Farm Payroll is the main event. Today, it feels less important compared to the ructions over China.On a normal week, the Non-Farm Payroll is the main event. Today, it feels less important compared to the ructions over China.
It’s also slightly less dramatic, given that the Federal Reserve took the plunge and raised interest rates last month. Of course, if Non-Farm is much weaker than expected, it could fuel concerns that the Fed hiked too early.It’s also slightly less dramatic, given that the Federal Reserve took the plunge and raised interest rates last month. Of course, if Non-Farm is much weaker than expected, it could fuel concerns that the Fed hiked too early.
Ransquawk have helpfully rounded up the Wall Street guesstimates:Ransquawk have helpfully rounded up the Wall Street guesstimates:
US #NFP Guesses SocGen, UBS 230k BarCap, BoA 225k GS, JP, MS 215k Citi, CS 210k Consensus 200k WF 195k Credit Ag 190k RBC 180k DBK 160kUS #NFP Guesses SocGen, UBS 230k BarCap, BoA 225k GS, JP, MS 215k Citi, CS 210k Consensus 200k WF 195k Credit Ag 190k RBC 180k DBK 160k
12.47pm GMT12:4712.47pm GMT12:47
Wise heads in the City say that we shouldn’t fixate on the exchange rate between the yuan and the US dollar.Wise heads in the City say that we shouldn’t fixate on the exchange rate between the yuan and the US dollar.
Instead, we should look at how the yuan is shaping up against a basket of other currencies (who will also have suffered from the stronger dollar too)Instead, we should look at how the yuan is shaping up against a basket of other currencies (who will also have suffered from the stronger dollar too)
And as these charts shows, China’s currency has been more stable on this basis::And as these charts shows, China’s currency has been more stable on this basis::
But on a trade-weighted basis, China's currency is quite stable https://t.co/AApWyBsE0r via @markets pic.twitter.com/pz3FBgGFsJBut on a trade-weighted basis, China's currency is quite stable https://t.co/AApWyBsE0r via @markets pic.twitter.com/pz3FBgGFsJ
China would like to remind everyone that the yuan appreciated 1% last year*. *on a trade-weighted basis. https://t.co/hPmNFYp1hHChina would like to remind everyone that the yuan appreciated 1% last year*. *on a trade-weighted basis. https://t.co/hPmNFYp1hH
So, the time to panic might be when the trade-weighed yuan dives, as that would suggest Beijing was struggling to handle the situation.So, the time to panic might be when the trade-weighed yuan dives, as that would suggest Beijing was struggling to handle the situation.
12.25pm GMT12:2512.25pm GMT12:25
Stephen Lewis on the China threatStephen Lewis on the China threat
Senior City economist Stephen Lewis has issued a long note on China today, explaining why there is such anxiety about China’s financial stability, and the consequences for the global economy if things turn very sour.Senior City economist Stephen Lewis has issued a long note on China today, explaining why there is such anxiety about China’s financial stability, and the consequences for the global economy if things turn very sour.
I’ve cropped out some highlights below, as it provides some useful insight into the situation.I’ve cropped out some highlights below, as it provides some useful insight into the situation.
Lewis points out that Beijing’s attempts to rebalance its economy away from manufacturing and into consumption will inevitably hurt growth:Lewis points out that Beijing’s attempts to rebalance its economy away from manufacturing and into consumption will inevitably hurt growth:
It should be no surprise that a rapidly growing industrial economy such as China’s is drifting into choppy financial waters. The advanced economies faced similar challenges at corresponding stages in their development. But, in coping with the consequences of financial turbulence, the advanced economies often suffered significant losses of output relative to potential. The Beijing authorities are professedly seeking to change China’s economic growth model from one which depends on exports and capital investment to one more firmly based on domestic consumption. But they may be over-estimating the extent to which politicians can choose how their economies grow. Since curbing growth in some sectors is usually easier than boosting it in others, the danger is that the attempt to re-orient the economy will result in overall weaker growth This is one reason, which seems to be widely acknowledged, why China’s future growth could well fall short not only of recent rates but even of the Beijing authorities’ more conservative projections for the years to come.It should be no surprise that a rapidly growing industrial economy such as China’s is drifting into choppy financial waters. The advanced economies faced similar challenges at corresponding stages in their development. But, in coping with the consequences of financial turbulence, the advanced economies often suffered significant losses of output relative to potential. The Beijing authorities are professedly seeking to change China’s economic growth model from one which depends on exports and capital investment to one more firmly based on domestic consumption. But they may be over-estimating the extent to which politicians can choose how their economies grow. Since curbing growth in some sectors is usually easier than boosting it in others, the danger is that the attempt to re-orient the economy will result in overall weaker growth This is one reason, which seems to be widely acknowledged, why China’s future growth could well fall short not only of recent rates but even of the Beijing authorities’ more conservative projections for the years to come.
Then there are the demographic problems, which prompted the abolition of the “One child per family” rule:Then there are the demographic problems, which prompted the abolition of the “One child per family” rule:
By 2050, those aged 65 or over could well stand at 38% of the labour force, slightly less favourable even than Japan’s present ratio. There could be ameliorating circumstances for China. There may be scope for more migration from the countryside to urban centres without loss of agricultural production, though much less than there used to be. There will very likely be support to China’s GDP growth from a shift in the urban workforce from low-productivity activities to higher-productivity occupations. Further, China would perhaps be less opposed on cultural grounds than Japan to immigrant labour, though there have been no moves in that direction yet. Indeed, the ruling Communist Party’s highly developed sense of self-preservation might be expected to resist any disturbance of the status quo. At the same time, in the nearer term, China faces a unique problem, the result of the recent abandonment of the one-child policy in favour of a two-child policy. To the extent that this measure is effective in raising the birth rate, it will temporarily boost the dependency ratio, that is, the proportion that the non-working population, old and young, bears to those of working age. Those who are working will need to increase their output merely to meet the needs of a growing non-active population. There will likely be a reduced margin of savings to finance capital investment and thereby to support future growth.By 2050, those aged 65 or over could well stand at 38% of the labour force, slightly less favourable even than Japan’s present ratio. There could be ameliorating circumstances for China. There may be scope for more migration from the countryside to urban centres without loss of agricultural production, though much less than there used to be. There will very likely be support to China’s GDP growth from a shift in the urban workforce from low-productivity activities to higher-productivity occupations. Further, China would perhaps be less opposed on cultural grounds than Japan to immigrant labour, though there have been no moves in that direction yet. Indeed, the ruling Communist Party’s highly developed sense of self-preservation might be expected to resist any disturbance of the status quo. At the same time, in the nearer term, China faces a unique problem, the result of the recent abandonment of the one-child policy in favour of a two-child policy. To the extent that this measure is effective in raising the birth rate, it will temporarily boost the dependency ratio, that is, the proportion that the non-working population, old and young, bears to those of working age. Those who are working will need to increase their output merely to meet the needs of a growing non-active population. There will likely be a reduced margin of savings to finance capital investment and thereby to support future growth.
And then there’s the geopolitics,...And then there’s the geopolitics,...
The region is also a potential war-zone in a way that neither North America nor even Europe appears to be at the moment. Reports this week that North Korea has tested a hydrogen bomb is a reminder of the severity of the threat. Beyond the North Korean danger, both the East China Sea and the South China Sea are possible flashpoints. In the former area, there was a stand-off between Japan and China over the Senkaku (Diaoyu) islands through most of last year. But on 20 December an armed Chinese coast-guard vessel entered territorial waters that Japan claims around the islands. In response to these and other regional tensions, the Japanese government has proposed for the fiscal 2016/17 year a 1.5% increase in military spending to a highest-ever level. This is significant in view of the pressure to achieve reductions in other spending programmes. The Japanese government had been allowed, under the nation’s post-war constitution, the right of self-defence, which would have covered operations around the Senkaku islands, but Mr Abe nevertheless pressed for, and in September secured, an amendment that would allow Japan to afford military help to allies. This strongly suggests that the Abe government foresees the possibility of Japan taking part in the resistance to what several nations in the region regard as Beijing’s aggressive strategy in the South China Sea.The region is also a potential war-zone in a way that neither North America nor even Europe appears to be at the moment. Reports this week that North Korea has tested a hydrogen bomb is a reminder of the severity of the threat. Beyond the North Korean danger, both the East China Sea and the South China Sea are possible flashpoints. In the former area, there was a stand-off between Japan and China over the Senkaku (Diaoyu) islands through most of last year. But on 20 December an armed Chinese coast-guard vessel entered territorial waters that Japan claims around the islands. In response to these and other regional tensions, the Japanese government has proposed for the fiscal 2016/17 year a 1.5% increase in military spending to a highest-ever level. This is significant in view of the pressure to achieve reductions in other spending programmes. The Japanese government had been allowed, under the nation’s post-war constitution, the right of self-defence, which would have covered operations around the Senkaku islands, but Mr Abe nevertheless pressed for, and in September secured, an amendment that would allow Japan to afford military help to allies. This strongly suggests that the Abe government foresees the possibility of Japan taking part in the resistance to what several nations in the region regard as Beijing’s aggressive strategy in the South China Sea.
It seems a long time since the Spratly islands first hit the headlines. It was as long ago as 1999 that a Filipino naval ship deliberately ran aground on one of those islands to establish a claim to the archipelago. Last year, in a dramatic development, it became clear that China was determinedly seeking to enforce its own title to the area when it built an artificial island on the foundation of the Mischief Reef and went on to claim, in contravention of UN rules, territorial waters around that construction. The US Navy has since sought to enforce freedom of the seas by disregarding China’s pretensions, thereby precipitating low-level exchanges with China’s ships.It seems a long time since the Spratly islands first hit the headlines. It was as long ago as 1999 that a Filipino naval ship deliberately ran aground on one of those islands to establish a claim to the archipelago. Last year, in a dramatic development, it became clear that China was determinedly seeking to enforce its own title to the area when it built an artificial island on the foundation of the Mischief Reef and went on to claim, in contravention of UN rules, territorial waters around that construction. The US Navy has since sought to enforce freedom of the seas by disregarding China’s pretensions, thereby precipitating low-level exchanges with China’s ships.
Vietnam also believes it has interests to defend in the South China Sea. In an ominous development, its government announced on 23 December that it would be taking delivery from Russia of two more Kilo-class submarines to supplement the four it already deploys. These vessels are reckoned to be especially effective in relatively shallow waters (the Iranian navy has three of them). Vietnam’s army has put troop concentrations in the northern province on the border with China under ‘high combat readiness’. This appears to be a defensive move. But investors should note that Vietnam’s defence doctrine is not based on attacking China’s naval forces head-on, a contest that Vietnam could hardly expect to win. Rather, in the event of hostilities, the aim of the strategists in Hanoi would be to use the submarines to prey on merchant shipping heading to and from Chinese ports through the South China Sea. Their calculation is that the resulting prohibitive cost of freight insurance, or indeed the unwillingness of insurers to provide cover at all, would cripple China’s trade and economic activity. It could also topple China’s financial system, an objective looking less fanciful in the light of this week’s evidence of fragility. Given Vietnam’s record in getting the better of super-powers, this strategic view should perhaps be taken more seriously than investors seem prepared to do at the moment.Vietnam also believes it has interests to defend in the South China Sea. In an ominous development, its government announced on 23 December that it would be taking delivery from Russia of two more Kilo-class submarines to supplement the four it already deploys. These vessels are reckoned to be especially effective in relatively shallow waters (the Iranian navy has three of them). Vietnam’s army has put troop concentrations in the northern province on the border with China under ‘high combat readiness’. This appears to be a defensive move. But investors should note that Vietnam’s defence doctrine is not based on attacking China’s naval forces head-on, a contest that Vietnam could hardly expect to win. Rather, in the event of hostilities, the aim of the strategists in Hanoi would be to use the submarines to prey on merchant shipping heading to and from Chinese ports through the South China Sea. Their calculation is that the resulting prohibitive cost of freight insurance, or indeed the unwillingness of insurers to provide cover at all, would cripple China’s trade and economic activity. It could also topple China’s financial system, an objective looking less fanciful in the light of this week’s evidence of fragility. Given Vietnam’s record in getting the better of super-powers, this strategic view should perhaps be taken more seriously than investors seem prepared to do at the moment.
12.01pm GMT12:0112.01pm GMT12:01
There’s drama in the City -- high street retailer Sports Direct has issued a profits warning.There’s drama in the City -- high street retailer Sports Direct has issued a profits warning.
The company admitted that it could miss its target of £420m profits by up to £40m, following weak sales since its last financial results on 10 December.The company admitted that it could miss its target of £420m profits by up to £40m, following weak sales since its last financial results on 10 December.
It blamed:It blamed:
“a deterioration of trading conditions on the high street and a continuation of the unseasonal weather over the key Christmas period”.“a deterioration of trading conditions on the high street and a continuation of the unseasonal weather over the key Christmas period”.
Shares are down around 5%, making it the biggest faller in London.Shares are down around 5%, making it the biggest faller in London.
Several other retailers have blamed the warm weather recently - including Next and Marks & Spencer. So it’s very plausible that demand for Sports Direct parka coats have fallen recently. But demand for other kit might have softened the blow?Several other retailers have blamed the warm weather recently - including Next and Marks & Spencer. So it’s very plausible that demand for Sports Direct parka coats have fallen recently. But demand for other kit might have softened the blow?
Sports Direct blaming unseasonable weather, but surely a mild autumn would encourage people to do more sports?Sports Direct blaming unseasonable weather, but surely a mild autumn would encourage people to do more sports?
A month ago, The Guardian exposed working conditions at Sports Direct, where workers are chivvied by tannoy to work faster, and underwent searches after their shift was over.A month ago, The Guardian exposed working conditions at Sports Direct, where workers are chivvied by tannoy to work faster, and underwent searches after their shift was over.
With trading conditions worsening, the company’s shareholders have a lot to ponder...With trading conditions worsening, the company’s shareholders have a lot to ponder...
@GrahamtRuddick JD Sports issued a profit upgrade on Dec 3rd...@GrahamtRuddick JD Sports issued a profit upgrade on Dec 3rd...
Updated at 12.05pm GMTUpdated at 12.05pm GMT
11.46am GMT11:4611.46am GMT11:46
The European stock market rally is petering out. Germany’s stock market is now in the red today:The European stock market rally is petering out. Germany’s stock market is now in the red today:
DAX negative pic.twitter.com/0mCBtaqYxMDAX negative pic.twitter.com/0mCBtaqYxM
11.46am GMT11:4611.46am GMT11:46
Now this is interesting.. China’s centraal bank has issued a statement, pledging to “further liberalise” interest rates.Now this is interesting.. China’s centraal bank has issued a statement, pledging to “further liberalise” interest rates.
Reuters has more details:Reuters has more details:
The central bank also said it would make the yuan more international, keep the currency basically stable, further improve the currency formation mechanism and deepen reforms of the foreign exchange management system and financial institutions.The central bank also said it would make the yuan more international, keep the currency basically stable, further improve the currency formation mechanism and deepen reforms of the foreign exchange management system and financial institutions.
The central bank will use medium-term loans, and pledged supplementary loans and credit policies to support key areas of the economy.The central bank will use medium-term loans, and pledged supplementary loans and credit policies to support key areas of the economy.
The central bank also said it would maintain prudent monetary policy and flexibly use monetary policy tools to keep adequate liquidity in the banking system.The central bank also said it would maintain prudent monetary policy and flexibly use monetary policy tools to keep adequate liquidity in the banking system.
11.07am GMT11:0711.07am GMT11:07
A quick recapA quick recap
If you’re just tuning in, here’s what you need to know....If you’re just tuning in, here’s what you need to know....
A sense of calm has returned to global stock markets today, following the worst start to a new year on record. But China’s economy remains a big fear, that could well dominate most of this year.A sense of calm has returned to global stock markets today, following the worst start to a new year on record. But China’s economy remains a big fear, that could well dominate most of this year.
China’s market has stabilised, closing 2% higher. Beijing authorities are thought to have been buying up shares, in an attempt to restore confidence.China’s market has stabilised, closing 2% higher. Beijing authorities are thought to have been buying up shares, in an attempt to restore confidence.
Traders were also encouraged that the yuan was fixed at a higher level today, easing fears of a currency war.But confidence in the Chinese authorities has been hit by this week’s drama:Traders were also encouraged that the yuan was fixed at a higher level today, easing fears of a currency war.But confidence in the Chinese authorities has been hit by this week’s drama:
Christopher Balding, a professor of finance and economics at Peking University’s HSBC business school, said:Christopher Balding, a professor of finance and economics at Peking University’s HSBC business school, said:
“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.”
More here:More here:
Related: China stock markets buffeted amid enduring currency concernsRelated: China stock markets buffeted amid enduring currency concerns
European stocks are all in the green today, ending a wild week on a stronger note.European stocks are all in the green today, ending a wild week on a stronger note.
Jasper Lawler of CMC Market says:Jasper Lawler of CMC Market says:
A rebound in Chinese shares and the price of oil provided some relief for shares in Europe on Friday after a brutal first week of the year.A rebound in Chinese shares and the price of oil provided some relief for shares in Europe on Friday after a brutal first week of the year.
But despite the recovery, world markets have still suffered a remarkably poor start to the year. $4trn has been wiped off global shares, according to BloombergBut despite the recovery, world markets have still suffered a remarkably poor start to the year. $4trn has been wiped off global shares, according to Bloomberg
Updated at 11.08am GMTUpdated at 11.08am GMT
10.54am GMT10:5410.54am GMT10:54
A handy reminder of how markets began 2016:A handy reminder of how markets began 2016:
Stocks this week pic.twitter.com/csb9KkxI9nStocks this week pic.twitter.com/csb9KkxI9n
10.45am GMT10:4510.45am GMT10:45
When financial historians look back at this period, they will probably conclude that China’s ill-fated and short-lived circuit breaker was not the best idea ever created.When financial historians look back at this period, they will probably conclude that China’s ill-fated and short-lived circuit breaker was not the best idea ever created.
It was meant to prevent mayhem, by briefly suspending trading when the market fell 5% and closing it off for the day if it lost another 2%.It was meant to prevent mayhem, by briefly suspending trading when the market fell 5% and closing it off for the day if it lost another 2%.
But as we saw on Monday, and Thursday, it actually sparked crashes as investors rushed to sell shares at the first sign that the market was going down.But as we saw on Monday, and Thursday, it actually sparked crashes as investors rushed to sell shares at the first sign that the market was going down.
So, full credit to Beijing for culling it yesterday - a move that was immortalised by the FT:So, full credit to Beijing for culling it yesterday - a move that was immortalised by the FT:
RIP China circuit breakers: blog by @PatrickMcGee_ with image that has gone viral in China https://t.co/8GddfgWVsk pic.twitter.com/dkBOOctVaORIP China circuit breakers: blog by @PatrickMcGee_ with image that has gone viral in China https://t.co/8GddfgWVsk pic.twitter.com/dkBOOctVaO
Alastair McCaig of IG says the abolishment of the circuit breaker helped Chinese shares to rise today.Alastair McCaig of IG says the abolishment of the circuit breaker helped Chinese shares to rise today.
Human psychology has had a strong hand to play in the way Chinese markets have behaved. The removal of the system that suspends the market should it fall too much has, ironically, seen the fear of entrapment reduced with Asian investors.Human psychology has had a strong hand to play in the way Chinese markets have behaved. The removal of the system that suspends the market should it fall too much has, ironically, seen the fear of entrapment reduced with Asian investors.
10.07am GMT10:0710.07am 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.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.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/VZ0cttuD7kOur 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/wTaQiRLigqOur 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