The US equity futures rose alongside European stocks while Asian shares fell after China moved to stabilize its currency, helping ease some of the market turmoil that kicked off the week.
Overnight, China’s central bank set the yuan’s official reference point at stronger than the key 7 yuan-to-the-dollar point on Tuesday. The move calmed currency markets, initially rocked by fears the U.S.-China trade war was devolving into a currency war.
Asian markets recap
Asian markets capped losses recorded earlier in the trade but ended the session with declines amid the escalating US-China trade war after Beijing confirmed it was freezing agricultural purchases in response to the new US tariffs. Last week, US President Donald Trump said the US would impose a 10% duty on Chinese imports worth another 300 billion USD, which will come into force on September 1.
In China, the mainland indexes ended the session into the red territory. The Shanghai Composite wiped out 1.56% of its value, reaching 2,777.56 points, while the Shenzhen Component fell by 1.777% to around 1,490.30 points. In Hong Kong, the index Hang Seng declined by 0.62% after earlier writing off more than 2% of its value. The Chinese Ministry of Commerce has announced that Chinese companies are suspending purchases of US agricultural goods in response to the threat from Donald Trump to impose new tariffs. China is one of the largest buyers of American agricultural goods. Meanwhile, the Chinese National Bank has set a reference rate of 6.9683 yuan to the dollar. On the background of trade tensions, Chinese rare earth metals stocks rose on Tuesday. JL Mag Rare-Earth’s stock price rose by 10% and Chengdu Galaxy Magnets stock rose by 9.98%. However, the stock price of Jiangmen Kanhoo Industry dropped by 9.99%.
In Japan, the blue-chip index Nikkei 225 was down by 0.65% to reach 20,585.31 points, while Topix fell by 0.44% and ended the day at 1,499.23 points. The best performers of the session on the Nikkei 225 were Subaru Corp (+8.09%), The Japan Steel Works (+6.87%) and Chiyoda Corp (+4.88%), while on the flipside were Maruha Nichiro Corp (-7.46%), Hitachi Zosen Corp (-6.42%) and Kajima Corp (-5.10%).
In South Korea, the local index Kospi wiped out 1.51% of its value and ended the day at 1,917.50 points.
The Australian S&P ASX 200 declined by 2.44% to 6,478.10 points.
European markets mid-session recap
European stocks turned positive on Tuesday morning after China’s central bank set the yuan’s official reference point at stronger than a closely watched level on Tuesday. The pan-European Stoxx 600 jumped by 0.4%, media stocks leading gains with a 1.3% rise as all sectors and major bourses edged into positive territory.
German index DAX 30 gained 82.22 points, or 0.71%, to 11,740.73 points at 09:55 GMT. The country’s 10-year yield fell one basis point to -0.53%, hitting the lowest on record. German factory orders, a leading indicator of the health of Europe’s biggest economy, increased unexpectedly strongly in June thanks to demand from outside the eurozone. The Economy Ministry said Tuesday that orders were up 2.5% compared with the previous month, when they were down 2%. Economists had expected a modest 0.4% increase. The figure for May was revised upward from the initial reading of a 2.2% drop. The stocks of carmakers edged higher with Volkswagen gaining more than 1%, while Daimler rose by 0.7%. The chemical giant BASF is up by 1.25%, while Bayer edged higher by 1.11%.
French index CAC 40 is rising by 0.88% to 5,287.53 points. The stocks of the most “Sino-sensitive” companies have recovered from the yesterday loses with Plastic Omnium gaining 1.3%, Faurecia added 2.6%, Valeo climbed 2.7%, while STMicroelectronics added 1.3%.
British index FTSE 100 stalled at 7,225.23 points at mid-session trading.
The oil majors BP and Shell, as well as the internationally-exposed stocks weighed on the blue-chip index. However, the fertilizer maker Sirius Minerals slumped nearly 26% to a more than four-year low after it suspended a planned 500 million USD bond sale central to the funding of its Polyhalite mining project in the north-east of England.
Wall Street pre-session recap
The futures of Wall Street indexes are higher on Tuesday with Dow Jones indicating a positive open by almost 80 points at 06:10 a.m. ET, following the terrible Monday’s trading. S&P 500 and Nasdaq Composite are also pointing at the positive start of the trading session.
Traders are monitoring earnings and data. There will be a new JOLTS (Job Openings and Labor Turnover Survey) report at 10 a.m. ET.
On the earnings front, Avantor and Bausch Health are due to report before the bell. Meanwhile, Disney, Host Hotels, Match Group, and Wynn Resorts will update investors after the bell.