Asian stocks tumble after US plunge

“Some sense of stability does seem to have been wrestled into the Chinese yuan this week, but the Chinese equity markets have been more immune to muscular shows of state intervention”, said Angus Nicholson, market analyst at IG.

“The weakness in China’s stock market has pressured the country’s currency lower, and a falling yuan has further weighed on global stock prices”, says Sharp.

The Toronto Stock Exchange’s S&P/TSX composite index was up 30.68 points at 12,404.58 but had been in the red.

Stock markets in Europe and Asia rose and oil prices jumped on Wednesday after Chinese trade data cooled concerns over the world’s second biggest economy, steadying money and currency markets in Shanghai and Hong Kong.

China’s central bank set a firmer mid-point rate for the yuan, signaling determination to hold the line against expectations of a sustained depreciation of a currency that has lost 5 percent of its value against the dollar since August.

Chinese stocks have fallen into bear market territory.

But that rally, largely driven by short-covering after a 20 percent fall since the start of year, proved to be shortlived.

“Traditionally Chinese shares perform relatively well around the time of lunar new year and Shanghai shares also appear to be supported around the 3,000 mark even as they briefly fell below that level yesterday”, he added. “Investors see no good reason to buy stocks now – the yuan is depreciating, the U.S.is raising rates, and the economy is deteriorating”.

December imports fell 7.6 percent receding for the 14th straight month but not as sharply as feared possibly due to factories stocking up on crude oil iron ore and other materials as global resource and commodity prices continued to fall. China reported its exports rose by 2.3% in yuan-denominated terms in December from a year earlier while imports fell by 4%.

“The market entered a disaster mode at the start of the year and it’s still in that pattern now”, Wu Kan, a fund manager at JK Life Insurance Co.in Shanghai, told Bloomberg.

The offshore yuan rose 0.08 percent to 6.5729 versus the U.S. dollar as at 8.20pm yesterday.

The yuan traded at 6.6162 to the dollar in the freely traded offshore market, up 0.3% from the previous day. But analysts warned the upside surprise in December did not necessarily mean sluggish global trade would be on more stable footing in 2016. Economists had forecast an 11.5 percent import slide, after an 8.7 percent drop in November.

China’s major share indexes have lost about 16 percent so far in 2016 and are not far from their 2015 lows, chalked up in August after losing more than 40 percent from early June. The US dollar gained 4 points in the Asian session to trade at 98.96 as the euro also gained 6 points to reach 1.0882.