China stocks trading halted after rout

The health of China’s economy has big implications for countries all around the world even though the USA economy is doing fairly well and Europe’s economy looks healthier. When you add in geopolitical issues there’s another excuse for people to be relatively timid.

The U.S. dollar opened lower against the Taiwan dollar as the local currency staged a rebound, with traders here taking advantage of the greenback’s gains seen a day earlier on the back of the local central bank’s intervention, the dealers said.

Brent crude cut a loss of more than 6 percent to trade down 0.4 percent, with traders citing short-covering. In particular Fed officials are watching to see if a slowdown there effects USA economic growth and employment or if it pulls down global inflation and keeps the Fed from reaching its 2 percent inflation goal.

They dropped $107.9 billion in December alone, the biggest monthly decline on record and more than markets had expected.

The impact was immediate as regional currencies went into a tailspin. “That’s not fully priced in”. The Bank of New York Mellon China ADR Index.BKCN lost 4.0 percent.

Japanese 10,000 yen bank notes and coins are displayed March 3, 2006. It’s down 3.1 percent this year. The offshore yuan traded at 6.6927 late Wednesday.

Stocks on Wall Street pared losses after China suspended the circuit breaker that stops trading for the day when stocks fall 7 percent, a halt that occurred twice this week.

“This isn’t good for the rest of the world”.

Because China’s economy is so large, other global currency markets rebalance their currencies so as to negate any benefit that would be felt by Chinese exporters. That’s the lowest close since October 6.

Financial stocks slumped. Citigroup gave up $2.37, or 4.7 percent, to $47.75. Japan’s currency surged 0.8 percent against the yuan to the highest level since October 31, 2014, the day that the Bank of Japan expanded monetary easing.

Local currency fell 8 paise or 0.12 percent against dollar to trade at 66.91. China is the largest export market for both South Pacific nations.

The smaller Nordic markets were down more than four percent. Alibaba Group Holdings Ltd (BABA.N) shed 5.6 percent and Baidu Inc. The euro was down 0.3 percent against the yen, close to Wednesday’s nine-month lows.

In the economic forecast prepared by the staff for the December FOMC meeting, real GDP growth in the second half of this year was little changed, on net, relative to the projection for the October meeting. That helped send copper producer Freeport-McMoRan down 64 cents, or 10.5 percent, to $5.53. Legislation recently approved by the U.S. House of Representatives would clamp down on trading partners’ currency manipulation, but the measure still must be approved by the Senate.

West Texas Intermediate rose 0.2 percent after dropping 2.2 percent Tuesday.

“It was a surprise opening of a new year, and a lot worse compared to the beginning of the last year”, said Chun Xia, a finance lecturer at the University of Hong Kong. The industry-funded American Petroleum Institute was said to report stockpiles fell by 5.6 million barrels while fuel supplies gained. Demand for the precious metal has been bolstered as gyrations in global stock markets enhance its allure as a haven investment.