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Shares, yuan up after China currency fix, export surprise; Italy bonds sell off

Yuan reference rate set at weakest level since 2008, but at stronger level than expectations.

China exports unexpectedly rebound.

➤ Philippine central bank cuts rate.

➤ Italy bond yields rise on mounting political uncertainty.

Global equities were on the rise and yuan appreciated against the dollar after a stronger-than-expected currency fix by China's central bank and a surprise growth in Chinese exports.

Wall Street is due to open higher today, and Chinese stocks recovered from several days of losses.

The U.S. issued an interim rule banning government purchases from five Chinese companies including Huawei Technologies Co. Ltd. Washington is also revising an initial tariffs list following feedback from companies as the U.S. prepares to impose a 10% tariffs rate on $300 billion of Chinese imports.

In Asia, the Shanghai SE Composite advanced 0.9% as data showed that Chinese dollar-denominated exports unexpectedly climbed in July. Hong Kong's Hang Seng gained 0.5%.

Japan's Nikkei 225 rose 0.4% and South Korea's KOSPI index added 0.6% amid reports that Japan gave the go-ahead to export a high-tech material to South Korea, which held off on deciding whether to remove Japan from a list of favored trading partners.

India's Bombay Stock Exchange SENSEX jumped 1.74% higher while Pakistan's Karachi Stock Exchange 100 index declined 1.8% as Pakistan suspended bilateral trade and downgraded diplomatic relations with India amid heightened tensions over the disputed territory of Jammu and Kashmir. New Delhi reportedly urged its neighbor to reconsider the decision.

In Europe, the FTSE 100 edged 0.3% higher around 6:30 a.m. ET, with Hargreaves Lansdown PLC's shares surging 9.1% following its earnings. Germany's DAX rose 0.9%, and France's CAC 40 advanced 1.3%.

Among currencies, the Chinese yuan gained 0.2% against the dollar as the People's Bank of China set the currency's daily reference rate at the weakest level since April 2008 at 7.0039 per dollar but at a stronger level than markets predicted. "The predominant interpretation has been that the PBOC is showing determination to let the yuan appreciate only at a controlled pace," analysts at ING Research wrote.

The dollar index, which measures the U.S. currency's performance against a basket of major peers, was little changed. Chicago Federal Reserve President Charles Evans said Wednesday that the Fed may have to slash rates at least one more time to help boost inflation and shield the U.S. economy against downside risks.

The Philippine peso appreciated 0.4% against the dollar as the Bangko Sentral ng Pilipinas cut its benchmark rate by 25 basis points to 4.25%, a day after rate cut decisions from three central banks.

The pound rose 0.1% versus the greenback.

The yield on Italy's 10-year bonds climbed 9 basis points to 1.498% as Italy's deputy prime minister, Matteo Salvini, asked Prime Minister Giuseppe Conte to replace Finance Minister Giovanni Tria, among other cabinet members, by Monday. He also threatened to dissolve the coalition with Five Star if his demands are not met.

Elsewhere, the yield on 10-year U.S. Treasurys added 5 basis points, and the yield on German bunds with the same maturity gained 2 basis points.

Among commodities, Brent crude rose 1.6% to $57.17 per barrel on the ICE Futures Exchange amid news that Saudi Arabia contacted other oil suppliers to explore options to stem falling oil prices. Gold lost 0.8% to $1,507.40 per ounce.

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The day ahead:

8:30 a.m. ET – U.S. jobless claims (Econoday consensus: 215,000)

10 a.m. ET – U.S. wholesale trade (Econoday consensus: 0.2%)

10:30 a.m. ET – U.S. EIA natural gas report

4:30 p.m. ET – Fed balance sheet and money supply

7:50 p.m. ET – Japan GDP

9:30 p.m. ET – China CPI and PPI