Asian stocks rise in China, extraction of yuan
By Andrew Galbraith
SHANGHAI (Reuters) – Gains on Chinese stocks and the yuan's stronger-than-expected daily fix helped lift a wide range of Asian stocks over water on Monday, but fixed gold prices underscored investor concerns over the risk of a prolonged Sino-American trade war.
MSCI's broadest equity index in Asia and the Pacific off Japan shook off early losses to achieve a 0.02% gain.
The index was helped by Chinese stocks, which rebounded from last week's losses. Blue-chip shares rose 0.96%, with listed brokerages bolstered by a late Friday announcement by China's securities regulator of relaxed margin financing rules.
The People's Bank of China (PBOC) set a daily midpoint for yuan trade – which determines land movement limits – at 7.0211 per dollar. It was weaker than Friday's limits, but stronger than the market's expectations.
Ryan Felsman, senior economist at CommSec in Sydney, said there was a "positive reaction" to Monday's fix, including a pick-up in the Australian dollar, as it reassured investors like China will not weaken the yuan smoothly.
At the same time, uncertainty contributes to how the US-China trade conflict will be resolved, contributing to market volatility, Felsman said.
One week ago, China allowed the yuan to break through the central level of $ 7 per dollar for the first time since 2008, causing Washington to label Beijing a currency manipulator and provoke market disruptions.
On Friday, the International Monetary Fund stated that its assessment was that the value of China's yuan was broadly in line with economic fundamentals.
On Monday, Australian shares dipped 0.17% and Indonesian shares fell 0.3% while the South Korean market reversed early losses to rise 0.39%.
Trad activity was relatively subdued with some regional markets, including Japan, Singapore and India, closed for holidays on Monday.
BAD NOTIFICATIONS
On Friday, Wall Street saw a three-day winning streak after US President Donald Trump said Washington continued the trade talks with Beijing, but that the US had no intention of entering into a deal for now.
These comments contributed to late sales in an unstable session where the Dow Jones Industrial Average fell 0.34%, the S&P 500 lost 0.66% and the Nasdaq Composite fell 1%.
White House trade adviser Peter Navarro later said that the United States is still planning to hold another round of trade talks with Chinese dealers.
Concerns about the adverse effects of the trade war were highlighted by a warning from Goldman Sachs about the growing risk of a US recession, and that it no longer expects a trade deal before the US presidential election in 2020.
Elsewhere, there was little positive news. Last week's data showed that the UK economy unexpectedly shrank for the first time since 2012 in the second quarter, while German industrial output suffered the largest annual decline in nine years. All of this aroused fears of the global recession as the escalating Sino-American customs war took a toll on trade and investment.
and uncertainty from traders and investors, "said Greg McKenna, strategist at McKenna Macro financial advisory firm in Australia.
A flight to perceived safe harbor assets helped lift the gold price above $ 1500 last week for the first time since April 2013 The precious metal threw some early gains on Monday, but last traded flat at $ 1,496.70 per ounce.
In foreign exchange markets, on January 17, 2017, sterling matched low against the US dollar, and bought as little as $ 1.2015 in the early Asian trading on Monday before ticking higher to $ 1,2037.
The British currency came under pressure on Friday following the pullback data on the British economy.
The dollar fell 0.2% against the yen to 105.45, and the euro fell higher to $ 1,1205. [1 9659023] The dollar index, which tracks the greenback against a basket of six major rivals, was flat at 97,493.
China's yuan on land weakened slightly against the dollar to 7.0623 while ns offshore counterparty strengthened 0.06% to $ 7.0918 per dollar. [19659025] "The market took the higher (yuan) fixes in its progress and will now focus on establishing a new equilibrium for USD / CNY … It is unlikely that PBOC will fuel excessive speculative RMB depreciation pressures after USD / CNY can trade over 7, "Bank of America analysts Merrill Lynch said in a note.
Oil prices plunged after rising sharply on Friday with a fall in European inventories and production cuts from the Organization of Petroleum Exporting Countries.
US crude oil was down 0.28% to $ 54.35 barrels and global benchmark Brent crude oil plunged 0.14% to $ 58.45 a barrel.
(Reporting by Andrew Galbraith; Editing by Shri Navaratnam and Richard Borsuk)
