BackAsian stocks fall with yuan as China profits decline
The Shanghai Composite Index slumped for a second day as data showed industrial companies' earnings slid 4.6% in October
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Wellington: Asian stocks slipped and the yuan weakened after China reported a decline in industrial profits. The euro traded near a seven-month low as traders positioned for a divergence in the monetary policies of Europe and the US.
The Shanghai Composite Index slumped for a second day as data showed industrial companies’ earnings slid 4.6% in October. Concern that China may get a lower-than-anticipated weighting in the IMF’s reserve-currency basket also weighed on the yuan. The euro headed for its biggest monthly loss versus the greenback since March and its longest-ever stretch of weekly declines against the yen. Copper extended this week’s rally on speculation China will act to support industrial metals, while US index futures increased following the Thanksgiving holiday. Oil fell.
China’s economic slowdown has weighed on regional equity markets this year as investors weighed a slump in manufacturing and commodity-intensive industries against government efforts to support growth. Odds of a rate increase from the Federal Reserve in December are holding above 70% even as anticipation builds that the European Central Bank will surprise some investors with the size of its stimulus next week.
“It looks increasingly likely that the Fed will move in December, in fact it’d be a shock to markets if it didn’t—the move has been well telegraphed," said Chris Green, director of economics and strategy at First NZ Capital Group Ltd in Auckland. “With regards to China, our sense is that there are still significant risks to the global economy but on the other side, that they’ve got the policy ammunition to dampen that risk." Bloomberg
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