Global stocks are higher on Wednesday, as People’s Bank of China set a higher reference exchange rate for the yuan and thus alleviating the tensions. The People’s Bank of China (PBOC) set the official midpoint reference for yuan at 6.9996 on Wednesday, just a hair away from the psychologically important 7-per-dollar level. The latest yuan fixing was slightly weaker-than-expected, keeping markets nervous about its intentions.
The currency change came after US President Donald Trump unexpectedly announced that he would impose new duties on Chinese imports worth 300 billion since September 1, intensifying the trade war between Beijing and Washington.
In Europe, the banking sector is in focus as the European banking index hit a one-year low following a slew of new financial results.
Asian markets recap
The major stock indexes in the Asia-Pacific region went in different directions on Wednesday, with investors watching the Chinese yuan closely amid an escalating US-China trade dispute. The People’s Bank of China set the official reference exchange rate for currency at 6.9996 yuan for the dollar, which was slightly below market expectations. The Chinese Central Bank allows the exchange rate to increase or decrease by up to 2% relative to the reference value.
In China, the mainland index Shanghai Composite fell by 0.32% to 2,768.68 points. Shenzhen Component grew slightly and Shenzhen Composite advanced 0.114%. In Hong Kong, the Hang Seng index fell 0.23% to 25,915.60 points, while Chinese automaker BYD fell 4.88% after the company announced its July sales had dropped by about 17% compared to the same period last year. The price of the company’s listed shares in Shenzhen has decreased by 0.62%.
In Japan, the blue-chip index on Tokyo Stock Exchange, Nikkei 225, fell by 0.33% to 20,516.56 points, one of the largest companies in the index – Fanuc, declined by 1.72%. Topix also declined slightly. The best performers of the session on the Nikkei 225 were Yokogawa Electric Corp (+4.87%), Keio Corp (+2.94%) and Olympus Corp (+2.87%), while on the flipside were SUMCO Corp (-9.25%), Nikon Corp (-7.97%) and Takara Holdings Inc (-7.80%).
At the same time, the South Korean index Kospi wiped out 0.41% of its value, reaching 1,909.71 points. The chipmaker SK Hynix rose by 2.64%.
Australian S&P ASX 200 rose by 0.64% to 6,519.50 points. Resolute Mining and Regis Resources added 8.71% and 6.22%, while Fortescue Metals Group dropped by 3.57%.
European markets mid-session recap
European stocks traded higher on Wednesday as fears over the intensifying US-China trade war cooled slightly on the tentative stability of China’s currency. The pan-European Stoxx 600 rose by 0.8% during morning trade, technology stocks leading the gains with a 1.2% climb while only banks and basic resources slipped into the red.
German index DAX 30 rose by 151.54 points, or 1.31%, to 11,719.50 points at 09:30 GMT. German industrial production fell by 1.5% in June, following a rise of 0.1% the previous month. The shares of Commerzbank are down by 4.5% after posting a net second-quarter profit of 271 million EUR (303.79 million USD) which was little changed from the same period a year ago, but exceeded the 217 million EUR expected by analysts. However, the local therapeutic antibody company Morphosys climbed 7.2% in early trade after raising its guidance for the year.
French index CAC 40 edged higher by 1.17% to 5,296.12 points. French trade balance decreased from 1.9 billion EUR to -5.2 billion EUR in June, mainly due to a backlash in exports and a slight decline in imports. The stocks of EssilorLuxottica climbed 2.7% after its vice-president and chief operating officer Hubert Sagnieres, told that the group has the means to make further acquisitions after that of GrandVision. the shares of Europcar Mobility Group gained 0.5% after an agreement to acquire the US car rental company Fox Rent A Car, which operates 21 stations dedicated to businesses and a hundred agencies managed in a franchise.
British blue-chip index FTSE 100 gained 0.92% to 7,237.39 points at mid-session trading on Wednesday. The commodities trader Glencore weighed as it fell 2.5% and hit a near three-year low after an almost one-third drop in core profit. Asset manager Standard Life Aberdeen gave up 6.5% despite an increase in first-half assets under management and administration.
Wall Street pre-session recap
Wall Street stock index futures were higher on Wednesday morning, recovering slightly from the collapses caused by the trade tensions between the world’s two largest economies.
At around 05:45 a.m. ET, Dow futures are up by 106 points, indicating a negative open of more than 47 points. Futures on the S&P and Nasdaq were slightly higher, as well.
Consumer credit figures for June will be released at around 3:00 p.m. ET.
In corporate news, CenterPoint, NRG Energy, and Teva Pharma are among some of the major companies set to report their latest quarterly earnings before the opening bell.