Global stocks sinks as Chinese currency weakens further

AP News
|
Posted: Aug 12, 2015 9:42 AM
Global stocks sinks as Chinese currency weakens further

NEW YORK (AP) — A second day of declines in China's currency is sending global stocks lower as traders worry about weakness in the world's second-largest economy.

The Dow Jones industrial average lost 193 points, or 1.1 percent, to 17,212 as of 9:35 a.m. Eastern time Wednesday.

The Standard & Poor's 500 index fell 19 points, or 1 percent, to 2,064. The Nasdaq composite declined 58 points, or 1.2 percent, to 4,977.

Markets were also lower in Europe and Asia. A weaker Chinese currency would make that country's exports cheaper on global markets.

U.S.-listed shares of Alibaba, the giant Chinese retailer, sank 8 percent after the company's sales fell short of analysts' estimates.

Bond prices rose. The yield on the 10-year Treasury note fell to 2.12 percent.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

Global stocks sank Wednesday as China let its currency fall for a second day following a surprise devaluation that rattled global financial markets.

China's government said the devaluation of the yuan was part of reforms meant to make its exchange rate more market-oriented. But the decision has added to worries over slowing growth in the world's second-largest economy and that Western companies might find it harder to sell their goods there.

KEEPING SCORE: The Chinese yuan's market rate fell 1.8 percent after Tuesday's nearly 2 percent decline, which was the biggest drop in a decade. Germany's DAX dropped 2.4 percent to 11,025.72 and Britain's FTSE 100 lost 1.2 percent to 6,588.08. France's CAC 40 shed 2.2 percent to 4,985.63. Wall Street looked poised for further losses, with both Dow and S&P futures down 0.9 percent.

CHINA'S DEVALUATION: The International Monetary Fund welcomed Beijing's move toward more flexible exchange rates, but many investors saw it as an attempt to stimulate a slowing economy, since a cheaper yuan will benefit China's exports by making them less expensive overseas. The devaluation triggered selling of shares, oil and other commodities on expectations of weaker demand from China.

THE QUOTE: "Markets were not expecting any major moves on the currency from the Chinese government, despite its benefits, as the risks were perceived as too high. Now that this Rubicon has been crossed, keen attention should be paid to any other significant moves to prop up the Chinese economy," Angus Nicholson, a market analyst at IG, said in a commentary.

VIETNAM DEVALUES: Vietnam doubled the trading band of its currency Wednesday to 2 percent allow it to weaken following China's devaluation. The State Bank of Vietnam said the weaker Chinese currency would have a "negative impact" on its economy. But analysts said the move was unlikely to spur competitive devaluations and would have only a modest impact.

ASIAN SCORECARD: Japan's Nikkei 225 fell 1.6 percent to 20,392.77 and Hong Kong's Hang Seng dropped 2.4 percent to 23,902.51. South Korea's Kospi lost 0.6 percent to 1,975.47 and Australia's S&P/ASX 200 slipped 1.7 percent to 5,382.10. The Shanghai Composite Index fell 1.1 percent to 3,886.32, and shares in Southeast Asia were also lower.

ENERGY: U.S. crude rose 57 cents to $43.65 a barrel in electronic trading on the New York Mercantile Exchange. It fell Tuesday to its lowest level in six years, losing $1.88 to $43.08 a barrel.

CURRENCIES: The dollar fell to 124.23 yen from 125.18 yen in the previous trading session. The euro rose to $1.1150 from $1.1047.