Futures pointed to notional gains of more than 1 percent on Wall Street but USA markets will be closed for a holiday.
Barclays indicated three bases of flux that had prospective negative input: low oil prices, capital surges and macroeconomic softness in China along with the burden on European banks.
Against a basket of currencies, the US dollar was flat, having risen around 1.5 percent since late last week.
Indeed, the strong yuan fixing by the People’s Bank of China (PBoC) on Monday was seen by some traders as a move to deflect speculation about a possible devaluation that has been one of the main factors roiling global markets. People’s Bank of China Governor Zhou Xiaochuan signalled in a Caixin magazine interview published over the weekend that there was no basis for further depreciation of China’s currency, providing relief for the country’s exporting neighbours anxious that a weakening yuan would hurt their competitiveness.
Consumer inflation edged up by 1.6 percent on-year in December, while companies’ factory-gate prices continued to fall, adding to concerns about growing deflation risks. Dow futures gained 1.2 percent to 16,102.00. Similarly, worse-than-expected news of Japan’s deepening economic recession did not deter investors there from buying back into the Nikkei 225 and Topix indices, which gained much of last week’s losses in heavy trading on Monday.
Japan’s Nikkei.N225 slipped 1.0 percent after it climbed 7.2 percent on Monday, its biggest daily gain since 2008 which recovered a large portion of its 11 percent slump last week – also its biggest since 2008. It appears that China’s trade balance data weighed heavily against positive sentiment. Benchmarks in Taiwan and Southeast Asia also rose.
In early trading, all Europe’s stock markets are trading sharply higher with the Stoxx 600 index up 2.9 percent at 321.30. However, unlike what some commentators have claimed, the Chinese economy remains in a strong position and the possibility of a purported “hard landing” is very slim.
South Korea’s Kospi SEU, +1.01% was up 1%. As shares are sold, markets slide and investors take flight, with the price trend accelerated by fund’s algorithms responding to falling share prices by, in turn, selling positions.
Asian shares extended their gains on Tuesday (Feb 16) as a combination of stabilizing Chinese markets, a rebound in oil prices and solid USA consumption data drove investors to look for bargains after last week’s rout.
Premier Li Keqiang said Monday that China’s regulatory policies in the stock and currency markets were correct and helped avoid systemic financial risks. The contract climbed $3.23 on Friday. Brent crude, a benchmark for worldwide oils, fell 38 cents to $32.98 a barrel in London.
In wake of the yen’s big rally, Japanese Prime Minister Shinzo Abe said Monday that Tokyo would take action against “excessive currency volatility”.
The emerging markets index has lost 9.2 percent this year and valued at 10.3 times its 12-month estimated earnings.