Shanghai fell yesterday, bucking a regional trend that saw markets rise in the wake of upbeat Chinese trade data that provided some much-needed respite from a volatile start to 2016.
After more than a week of sharp losses fuelled by worries over China’s economy, news that the country’s exports had picked up in December provided some incentive to buy after a strong lead from Europe and New York.
The rise in overseas shipments, from a fall in November, indicated authorities’ weakening of the yuan currency against the dollar was beginning to filter through.
The figures came against a backdrop of contracting global trade last year, Bloomberg News reported, meaning China’s export performance was relatively strong.
“China actually outperformed the rest of the world in exports, with its share in global exports rising,” it cited Larry Hu, head of China Economics at Macquarie Securities in Hong Kong, as saying in a report ahead of the data.
While the positive news sent Shanghai stocks higher initially, they ended the day 2.4% in the red again having already slumped almost 15% this year.
However, Hong Kong ended up 1.1% and Sydney, where several firms with strong trade links with China are listed, closed 1.3% higher, having finished in the red every previous session this year.
And Tokyo finally ended on a positive note after dropping for six straight sessions, gaining 2.9%.
Dealers were also buoyed by the central People’s Bank of China’s decision not to lower its yuan fixing against the dollar. Its weakening of the rate was one of the catalysts for last week’s global rout. In a sign of easing tensions, the rate in Hong Kong that banks charge each other to borrow the yuan nosedived to just over 8% yesterday from the previous day’s record near 67%.
The rare upbeat mood followed healthy gains in Europe and the US, where a positive start to the corporate earnings season provided some support.
Crude fell briefly below $30 a barrel in New York Tuesday for the first time since December 2003 but prices picked up after a private report showed US supplies eased last week. However, the commodity remains under pressure from a supply glut, weak demand and a global slowdown – especially in China – while key producers in the Opec continue to pump at near record levels. Yesterday US benchmark West Texas Intermediate was up 1% and Brent gained 0.5%.
On currency markets the confident mood saw investors seek out higher-risk investments. The crude-reliant Malaysian ringgit rose 0.7% against the dollar, while Australia’s dollar was up 0.6% and the Indonesian rupiah gained 0.4%. South Korea’s won gained 0.5%.
The greenback also rallied against the yen, having fallen more than two% since the start of the year.
A man walks past an electronic quotation board flashing the Nikkei key index in front of a securities company in Tokyo. Japanese shares rebounded sharply yesterday, finishing in positive territory for the first time in 2016.
