Global markets mixed after Chinese shares gain — Business updates

It was the Dow’s worst five-day start to a year on record, according to Dow Jones.

Volatility in Chinese markets spurred a global selloff in riskier assets as concern deepened over the ruling Communist Party’s ability to manage an economic slowdown. It capped off the second-strongest year of employment gains since 1999.

“The GBPUSD, now under intense pressure, remains fundamentally bearish from the BoE’s hesitance to commit to raising United Kingdom rates and this may offer a short term interest rate differential between the Bank of England and Federal Reserve”, Otunuga added.

“Investors should stay calm and stay focused on what they can control”, said Richardson.

“Instead”, Green adds, “they should be focusing on the Chinese economy, which is the world’s second largest. We’re still walking on egg shells, but this is definitely going to help turn a corner”. That weakness is a bigger incentive for Chinese investors to sell shares and move money overseas. That compares with the median forecast of 6.65 per dollar. In Europe, the pan European Stoxx 600 (^STOXX) index was around 0.45 percent higher on Friday morning.

It set the rate at 6.5636 per dollar prior to market open, firmer than both the previous fix and Thursday’s closing quote. The circuit breaker system was implemented at the start of this year.

Peter Donisanu, global research analyst at Wells Fargo Investment Institute in St. Louis, says the meltdown was triggered by some negative data about Chinese manufacturing and by the depreciation of the yuan, China’s currency.

“They don’t want an excessive devaluation”, Mr Sacha Tihanyi, senior emerging markets strategist at Toronto Dominion Bank in NY, said by phone yesterday (Jan 7). The Shanghai Composite Index rallied after people familiar with the matter said state-controlled funds bought equities. Russian markets were closed for a public holiday. Financial stocks were the biggest drag on the index, with Commonwealth Bank of Australia down 1.7 percent, National Australia Bank down 1.4 percent, Australia and New Zealand Banking Group down 0.5 percent and Westpac Banking Corp off by 0.3 percent. “A level of the currency that would make sense for the USA doesn’t make sense for China”, said Louis Kuijs, head of Asian economics of Oxford Economics. India’s rupee and South Korea’s won strengthened, advancing at least 0.2 percent.

US payroll growth surged in December, capping the second-best year for American workers since 1999. The FTSE 100 index in London rose almost 40 points to 5591.89, a 0.6% gain.

The euro fell after German industrial production unexpectedly dropped in November.

Treasury yields held higher, with the 2-year yield at 0.98 percent and the 10-year yield at 2.18 percent.

Deng Ge, a spokesman for the China Securities Regulatory Commission (CSRC), said the regulator chose to dump the rule because the circuit breakers – which mandated that trading be halted for 15 minutes if the CSI 300 Index rose or fell 5 percent and for the rest of the day after a change of 7 percent – made share prices fall even faster.

The shaky risk appetite seen this week sent investors flocking to low-risk assets such as bonds, gold and traditional safe-haven currencies, although that demand eased slightly on Friday.