TOP STORIES:
China stocks face moment of truth after unprecedented trading
halt - (www.reuters.com) China struggled to
shore up shaky sentiment on Tuesday a day after its stock indexes and yuan
currency tumbled, rattling markets worldwide, but analysts warned investors to
buckle up for more wild price swings in the months ahead. Stocks fell more than
2 percent in early trade, prompting fears that exchanges were set for a second
day of panic selling after a 7 percent dive on Monday set off a new
"circuit breaker" mechanism, suspending trade nation-wide for the
first time. But both the central bank and the stock regulator reacted quickly,
and major indexes recouped most of their initial losses despite a late
afternoon scare. The People's Bank of China (PBOC) poured nearly $20
billion into money markets, its largest cash injection since September, and
traders suspected it was using state banks to prop up the yuan CNY=CFXS at the same time.
Fears mount over rise of sovereign-backed corporate debt -
(www.ft.com) Almost $1tn of debt linked to emerging
market governments is being camouflaged by the growing use of bonds that offer
implicit state backing without always appearing on government balance sheets.
The stock of so-called quasi-sovereign bonds issued in dollars by emerging
markets has risen sharply and is now greater than that of all EM sovereign
dollar debt. Concern is rising that such debts will come under strain this year
as the US dollar continues to strengthen against
the renminbi and other emerging
market currencies, making the cost of debt service harder to
bear. The sharp growth in quasi-sovereign bonds issued in dollars by countries
such as China, India and Russia suggests developing countries are increasingly
transferring debt obligations to third parties that have taken advantage of
global central bank action to cut borrowing costs by loading up with cheap
debt.
Baltic
Dry Ship Index Tumbles to Fresh Record Amid China Turmoil - (www.bloomberg.com) The Baltic Dry Index,
a measure of the cost of transporting commodities, plunged to a record amid
signs of slowing economic growth in China that’s also hurting the nation’s
stock market. The index retreated 1.1 percent to 468 points, tumbling below a
previous record low set in December. Rates declined for all except one of the
vessel types monitored. China moved to support its sinking stock market after a
$590 billion sell off as state-controlled funds bought equities and the
securities regulator signaled a selling ban on major investors will remain
beyond this week’s expiration date, according to people familiar with the
matter. While movements in stock markets aren’t directly correlated to shipping
rates, both respond to movements in the nation’s wider economy. Growth in China
slowed to a 6.9 percent pace last year, the weakest in decades, and will
decelerate again this year and next, economists’ forecasts compiled by
Bloomberg show. The nation accounts for about two in every three iron ore
shipments, the most important cargo for owners.
Crowd
Favorites Strike Out in Opening Day Rout as Banks Sell Off - (www.bloomberg.com) It’s hard to imagine
more beloved U.S. stock trades at the start of 2016 than going long bank and
technology companies. Or, for now, a more painful one. Shares of financial and
information-technology companies in the Standard & Poor’s 500 Index tumbled
as much as 3.1 percent, their biggest losses in four months, as another
China-induced rout spread through U.S. equities. Financials closed down 2.1
percent, the most in the index, while tech stocks recouped about half of their
losses to end 1.6 percent lower. Confidence cratered and investors turned
skittish about the most economically sensitive long bets amid renewed concerns
of slower global growth.
Grains Fall to Nine-Year Low on Global Supply Glut, Equity Rout
- (www.bloomberg.com) A measure of wheat,
corn and soybean prices fell to a nine-year low as beneficial weather in Latin
America boosted concerns that global supply gluts will expand, while a slump
in equities dragged commodities lower.
The Bloomberg Grains Subindex fell as much as 2.1 percent to 38.77, the lowest
since Sept. 15, 2006. Beneficial rain boosted prospects for crops in Brazil,
and Argentina exporters are increasing shipments, partly after the government
relaxed tariffs. World equities headed for the biggest drop to start to a year
in at least three decades, led by a rout in China.
U.S. manufacturing activity slumps, construction spending falls - (www.reuters.com)
Stocks Slump Across Europe and Asia Following Shanghai's 7% Crash - (www.bloomberg.com)
China Halts Stock Trading After 7% Rout Triggers Circuit Breaker - (www.bloomberg.com)
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