Market Outlook: China cuts reserve requirements

China Stocks Yuan Tumbled Yesterday After PBOC Unveiled RRR Cut

The shift in yields is also sucking funds out of emerging markets, putting particular pressure on the Chinese yuan as Beijing fights a protracted trade battle with the United States.

Chinese stocks took a hammering Monday as traders returned to work after a weeklong holiday in the world's second-largest economy.

The United States, Europe and other trading partners say initiatives such as "Made in China 2025", which calls for state-led creation of champions in robotics and other fields, violate Beijing's obligations to open up its market to foreign companies.

Depreciation pressure on the renminbi has grown since mid-April, when the strength of the USA dollar gathered pace.

It is the fourth time the country's central bank has cut its reserve requirement this year. Some analysts now expect a cut in the official policy interest rate to bring interbank lending rates down.

"China sectors such as energy, IT and industrials will be most impacted based on our analysis, while sectors such as real estate, insurance, diversified financials, telecom and utilities generate virtually no revenue from the USA", a team led by Pedro Martins said in a note.

For the Chinese currency, investors always anchor an important "psychological" exchange rate at 7 against the USA dollar, and they worry that market panic may emerge if the renminbi weakens past that rate.

Beijing imposed similar controls in October 2015 after a change in the exchange rate mechanism prompted markets to bet the yuan would fall.

Buyer of Banksy work that self-destructed to keep it
He said the auction house was still "busily figuring out" how the transaction for the now radically altered work will play out. Banksy also created a documentary file " Exit Through the Gift Shop " that was billed as the first street art disaster movie.

"Depending on the economic situation, it [China] should prepare more powerful monetary and fiscal policy tools, possibly including a large-scale stimulus package", the commentary in Global Times said.

"We've been expecting for some time now the USA market to start delivering volatility".

China's foreign exchange reserves dropped to a 14-month low at the end of September amid prolonged trade tensions with the USA and a weakening yuan.

Oil prices skidded in line with U.S. equity markets, even though energy traders anxious about shrinking Iranian supply from U.S. sanctions and kept an eye on Hurricane Michael, which closed some U.S. Gulf of Mexico oil output.

PBOC's latest move came at the end of a week-long national day holiday in China.

That left the dollar at 95.4397 against a basket of currencies. The global dollar index rose to 94.143 from the previous close of 94.133. The yuan fell about 0.56 percent against the dollar in September.

Despite the yuan's steady depreciation in recent months, there have been few signs so far of a spike in capital outflows like those seen a few years ago after a surprise devaluation by the PBOC. Retail sales this year have grown at the slowest rate in a decade.

The central bank claimed the move would have little impact on the yuan, saying it had solid fundamentals and would remain stable, but reduced the central parity rate against the dollar by 165 basis points yesterday, to 6.8957. Negative number indicates that spot yuan is trading stronger than the midpoint.

Related News:

  • Kanye West at the White House hugs, talks with Trump

    Kanye West at the White House hugs, talks with Trump

    " Trump is on his hero's journey right now". "He might not have thought he'd have a insane motherf-- like [me]" as an ally. On Oct. 1, West - who prefers to be called "Ye" although no one calls him that that - also told TMZ he was going to Africa.
    Trump blames Fed for stock rout, says central bank ‘ridiculous’

    Trump blames Fed for stock rout, says central bank ‘ridiculous’

    Trump has often pointed to stock market records set during his time in office as a measure of his success. IMF Managing Director Christine Lagarde also cautioned against reading too much into the sell-off.
    Channing Tatum and Jessie J spark dating rumours

    Channing Tatum and Jessie J spark dating rumours

    It's assumed that the pair met when she presented Channing Tatum with an MTV Movie Awards in 2015, for Best Comedic Performance. Channing , for the most part, has stayed relatively silent on the divorce, while Jenna has been more forthcoming about it.
  • China admits detaining missing Interpol chief, accuses him of bribery

    China admits detaining missing Interpol chief, accuses him of bribery

    The statement said Meng's "insistence on doing things in his own way meant he only had himself to blame for the investigation". Interpol President Meng Hongwei delivered his opening address, in July 2017, at the Interpol World congress, in Singapore.
    Space crew survives plunge to Earth after Russian rocket fails

    Space crew survives plunge to Earth after Russian rocket fails

    Popular Mechanics reports that Thursday's launch is the fourth time that a ballistic re-entry has occurred in the Soyuz program. The two crew members, astronaut Nick Hague and cosmonaut Aleksey Ovchinin, made it back to the surface safe and sound .

    The 'scary-looking' view of Hurricane Michael from the International Space Station

    The threshold for a Category 5 hurricane is 157 miles per hour maximum sustained winds. "We're sending them out now", Scott said. Hurricane Michael continued to batter the Southeast, pummeling states with powerful rain, wind and flooding.
  • British PM May briefed inner cabinet 'Brexit deal close'

    British PM May briefed inner cabinet 'Brexit deal close'

    The de-facto Deputy Prime Minister was pressed on the DUP's support when he appeared on ITV's Peston on Wednesday night. The plan would keep the whole of the United Kingdom in a customs union with the EU until a free trade deal was reached.
    World Mental Health Day observed

    World Mental Health Day observed

    No wonder mental health schemes and mental healthcare are not so advanced in India, as in the Western world. "In fact, I have never come across such a focus on mental health awareness in a prep school before".
    United Kingdom  companies can't afford to ignore mental health issues

    United Kingdom companies can't afford to ignore mental health issues

    A 10-year-old boy from Monmouth is leading a campaign to raise awareness among his peers of mental health . We can not afford to wait five years, which feels like a lifetime to a young child.
  • Kanye West has a bad  iPhone passcode

    Kanye West has a bad iPhone passcode

    Invited to speak by Trump, West launched into a long, winding discourse, occasionally slapping the Resolute Desk for emphasis. On Oct. 1, West - who prefers to be called "Ye" although no one calls him that that - also told TMZ he was going to Africa.
    First poster for Disney's

    First poster for Disney's "Aladdin" live-action movie teases Genie's arrival

    Aladdin plans to uses these wishes to win over the attractive Princess Jasmine, but the evil Jafar has other plans. The " Aladdin " remake also stars Mena Massoud as Aladdin , Naomi Scott as Jasmine and Marwan Kenzari as Jafar .
    McConnell: If Democrats investigate Trump, it could help him win re-election

    McConnell: If Democrats investigate Trump, it could help him win re-election

    Just a few days ago, 50 Republican senators cast the deciding votes for Brett Kavanaugh to ascend to the highest court in the U.S. Meanwhile, some endangered Democrats are eschewing the pushback that Holder and Clinton are calling for.


Most liked

BCCI announces India squad for first 2 ODIs against Windies
Thanks to his brilliant performances in Tests, Ravindra Jadeja is all set to make a comeback in the ODI squad. However, 33-year-old Dinesh Karthik, who failed to capitalise his opportunity in the Asia Cup, misses out.

Paul Pogba reveals two areas of his game he must improve
Paul Pogba says becoming captain of France is not one of his ambitions, saying he can be a leader on the pitch without an armband. The report added that it would not be the 29-year-old's last time to play behind a striker.

Rescuers, Army personnel search for Hurricane Michael survivors
It weakened to a storm as it moved inland towards the north-east , but at least six people have died, a lot of them in Florida. Michael, which decreased to a tropical storm overnight, is continuing to weaken as it moves along the southeast US coast.

Trump not keen to limit Saudi arms sales amid Khashoggi probe
The Virgin Group founder joined a mounting chorus of worldwide concern about the fate of Jamal Khashoggi, who vanished last week. His fiancée, waiting outside, said he never emerged and Turkish sources said they believe Khashoggi was killed in the building.

Malaysia Moves Ahead on Effort to Abolish Death Penalty
In a statement on Thursday, Amnesty International said the decision was a " major step forward ". Amnesty International also cheered the news, calling it "an astounding announcement".

Google Chromecast 2018 launched with minor design, specs upgrade
After lab-testing the Pixel 3 XL , they've concluded that the OLED Pixel 3 XL display has earned the "highest A+ rating" as well. The phone is made of glass, which means that Pixel 3 phones will be the first Google Pixel phones to support wireless charging.

Facebook launches AI-powered video chat devices
It should be noted that the company actually delayed the release of Facebook Portal until after the Cambridge Analytica scandal . The company states that it won't allow Facebook to listen, view or even keep track of the contents of video calls over Portal .

Prince Harry and Meghan Markle Reportedly Trying to Have a Child
About 38,000 people signed a petition, organised by campaign group Republic, against taxpayers' money being spent on the occasion. The Royal Family and The Duke of York's YouTube channels as well as Facebook and Twitter pages will show the event.

3 takeaways from ALDS Game 4
Since losing Game 2 of the 2004 ALCS, the Red Sox have outscored the Yankees 34-9 in postseason games in the Bronx. The Yankees bullpen was the class of the league, with four proven closers ready to come out at any time.

IL reports 9 recent acute flaccid myelitis cases
The condition is rare, with only 1 in 1 million people in the United States contracting the disease, according to the CDC. A hospital spokesperson couldn't release details about the patient's age, condition, or sex due to health privacy laws.

Pentagon grounds entire fleet of F-35s following crash
More than 250 F-35s will be affected in the United States, as well as almost 100 in other nations, according to AP reports . F-35 combat jets was grounded to investigate engine problems that may have caused a Marine Corps plane crash last month.

Turkey steps up pressure on Saudi Arabia over missing journalist
Social media sleuths identified another man from the squad as a senior crimes scene investigator in Saudi Arabia. Earlier this year, Khashoggi told CBC's The National there is "no room for critical dissent" in Saudi Arabia .

Razer Phone 2 brings faster performance, Razer Chroma - Mobile Phones
You can choose to have the logo light up when you get app notifications or have it display different effects. The new phone is an updated version of the brand's flagship Razer Phone, which was launched previous year .

Near 850,000 customers without power in U.S. Southeast after Michael
Scott said one benefit of the rapidly moving Michael was that it hit during the day and was out of the state before sunset. Hurricane-force winds extended up to 45 miles (75 kilometres) from Michael's centre at the height of the storm.

'Horrendous. Catastrophic': Menacing Michael Leaves Florida Devastated, Heads for Carolinas
A pine tree punched a hole in their roof, and Beu's ears popped because of the drop in barometric pressure from the storm. It was a category two hurricane by Tuesday, and a borderline category five on Wednesday morning, packing 155mph winds.