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Home / Business / Dow bounces back after China first blinks

Dow bounces back after China first blinks



China priced the yuan's reference rate of $ 6,9683 on Tuesday, a 7: 1 key against the US dollar. Although it was the weakest level for the yuan in 11 years, many Wall Street investors feared that China would price the yuan under the psychological 7: 1 barrier.

The controlled yuan continued to slide Tuesday, but the pace of the decline slowed. One dollar last bought $ 7.0200 yuan in China and 7.0490 yuan in the offshore market, where the currency trades more freely.

But the feeling is nevertheless better.

The Dow ( INDU ) traded more than 200 points, or 0.8%, higher on Tuesday morning, while the S&P 500 ( SPX ) popped 0.9% higher. The tech-heavy Nasdaq Composite ( COMP ) that suffered the worst in Monday's sales, was 1
.2% higher.

Equity investors also consoled the Chinese central bank announcing plans to issue central bank bills worth 30 billion yuan next week. It supported China's currency, which rebounded slightly against the dollar after the announcement.

"Also supporting the markets is likely to hunt for companies with good fundamentals and short coverage elsewhere," Forex.com technical analyst Fawad Razaqzada wrote in a

Asian stock closed lower, while European stocks are about to get something Tuesday.
China devalued its currency on Monday, causing it to fall below a key threshold that was last broken during the financial crisis. Global shares sold in response, and the Dow, S&P 500 and Nasdaq Composite recorded their worst day in 2019. The Nasdaq became the most affected because tech stocks would be hit particularly hard by an escalation in the trade war.

But now the markets are moving.

Investors feared that the label would eliminate China's incentive to keep the yuan above the 7: 1 dollar ratio, triggering a currency war with the United States. A further devaluation of the yuan may ease the burden of US tariffs on China. Wall Street fears that a sharp fall in the yuan could escalate the trade war, prompting the US to raise its tariffs for China or seize on the value of the US dollar.


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