The Carnage Returns: Stocks Tumble After Sharp Chinese Devaluation; Brent At 2004 Lows; Gold Surges
- The Carnage Returns: Stocks Tumble After Sharp Chinese Devaluation; Brent At 2004 Lows; Gold Surges
by Tyler Durden, www.zerohedge.com
… Then overnight, even as Chinese stocks surged higher by 2.3% after the ban on major shareholder selling was extended, the global market was far more focused with what was going on in China’s currency, which as reported overnight plunged to new 5 year lows, while the spread between the onshore and offshore Yuan rose to a record wide, suggesting the depreciation in the currency is only going to accelerate from here, …
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“China is for sure back in focus,” said Didier Duret, chief investment officer at ABN Amro NV’s wealth-management unit. “I’d say this is an echo of what happened in August maybe more than a replay. It’s making people nervous.”
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This accelerating depreciation, despite constant official lies to the contrary, such as this one from yesterday….
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* CHINA’S YUAN WON’T SEE SHARP DEPRECIATION: SECURITIES JOURNAL.
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… has clearly spooked traders and heightened concerns that the outlook for global growth is dimming. To be sure, North Korea’s first hydrogen bomb test overnight even as geopolitical tensions in the Mideast refuse to go away, have not helped risk sentiment. The MSCI All-Country World Index fell 0.4 percent at 10:49 a.m. London time. The Stoxx Europe 600 Index slid 1.1 percent and futures on the Standard & Poor’s 500 Index dropped 1.4 percent.
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As a result, the sharp weakness seen early in the session in US equity futures has growing worse, and while global equities are down across the board, today’s session could be as bad as that of Monday if not worse, especially since moments ago Brent tumbled below $35 for the first time since 2004.
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A quick reminder why China’s devaluation is bad – in a zero sum world, China’s export gains, mean everyone else’s export losses: “This isn’t good for the rest of the world. Until China stops weakening the yuan, global markets will struggle to stabilize,” said Koichi Kurose, Tokyo-based chief market strategist at Resona Bank Ltd. “The Chinese authorities may be trying to prop up the economy by boosting exports, but while that’ll help one part of China’s economy, it comes at the sacrifice of someone else.”
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