Market calm emerges amid China angst

August 14 01:08 2015

After two days of turbulence caused by China’s surprise intervention in currency markets, global markets flashed signs of stability Thursday as stocks around the globe rebounded after China slowed the pace of yuan depreciation and its central bank took steps to reassure markets.2013-11-04T131020Z_8_CBRE99U0VX000_RTROPTP_3_MARKETS-STOCKS_original

The stock market rebound began in China, where the Shanghai composite jumped 1.8%. Stocks also rose 1% in Tokyo and rebounded sharply in Europe after the worst day of the year on Wednesday. Around 9:30 a.m. ET, Germany’s DAX, which tumbled more than 3% yesterday, was 1.3% higher, while stocks in the CAC 40 in Paris were up 1.6% and shares of London’s FTSE gained 0.1%.

U.S. stocks, which dove sharply Wednesday only to rebound and end higher, were higher in afternoon trading as the Dow Jones industrial average was up 0.4%  and the Standard & Poor’s 500 index gained 0.2%. The Nasdaq posted a 0.4% gain. The fear is that China’s economy is slowing more than expected and that U.S. companies that do business there would be hurt by a stronger dollar related to the yuan depreciation, which would dent sales of U.S. products in China.

China reduced the value of its currency, the yuan, vs. the dollar for a third straight day, but at a slower pace. The People’s Bank of China “fixed” the rate of the yuan vs. the dollar down another 1% Thursday, which was smaller than Tuesday’s 1.9% devaluation and Wednesday’s 1.6% reduction, and close to last night’s close. The PBoC also “dismissed claims it intended to weaken the yuan by 10% to support exports as ‘nonsense,’” according to Barclays.