Feeble calm crawls into Asian markets as Yuan steadies

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Feeble calm crawls into Asian markets as Yuan steadies

On Wednesday, the 7th of August 2019, a basket of Asian markets was edged up, as investors took a breather after a scary week-long steep sell-off. Aside from that, critical measures taken by People’s Bank of China (China’s Central Bank) to restore Yuan below 7 per American dollar had eased some of market concerns, keeping a full-blown US-China war over trade and currencies at a latent state, though several analysts were quoted saying that latest restoration of Chinese Yuan would likely to be shortlived, as Beijing would unlikely to stomach an added tariff on its $500 billion worth of US export.

As currency rigging has been one of the oldest ways to ensure higher profit margin for any export-oriented economy since the post-World War II Bretton Wood meet of global finance ministers, China would be devaluing its currency further to grapple with an additional 10 percent levy on its $300 billion US export.

Nonetheless, MSCI’s broadest index of Asia-Pacific shares outside Japan inched up by 0.05 percent on midday Asian trading hours after shedding off as much 8.26 percent over the past eight sessions. Meanwhile, Japan’s Nikkei 225 soured 0.81 percent to 20,417 amid an intensified trade row with South Korea, which seized roughly 10 percent of Japan’s export-oriented revenues over the recent weeks, while Hong Kong’s Hang Seng dropped 0.64 percent to 25,810.15 over worries of further exasperation of a trade upheaval.

Elsewhere in Asia, mainland China’s Shanghai SSE Composite index has been a penny lower at midday trading hours, Australia’s ASX 200 added 0.75 percent to 6,526.10, while New Zealand’s NZX 50 index wrapped up Tuesday’s (August 6th) market up by 1.14 percent to 10,707.87 following a surprise 50-basis point rate-cut by the Reserve Bank of New Zealand.

Expressing concerns over growing uncertainties on global trade outlook amid intensifying abuse of globalization and exploitation of protectionism, an investment director at Fidelity, Masahiro Fukuda said, “Global financial markets have been shaken by concerns that escalating U.S.-China trade tensions, which now has triggered a currency war, would cool the world economy substantially.

While we cannot rule out the possibility of political negotiations leading to unexpected outcomes, we think it is unnecessary to worry about recession as various fiscal and monetary stimulus should support the economy of the two courtiers. ”