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Monday, August 24, 2015

Great fall of China sinks world stocks, dollar: Wall Street's rally goes up in smoke, indexes end lower

Li Keqiang: China's economy there is no basis for the continued depreciation of the renminbi at a reasonable range of current Reuters, Beijing, August 25 - Chinese Premier Li Keqiang said that China's economic operation in a reasonable range, the current basis for the continued depreciation of the yuan does not exist, it can be maintained at a reasonable and balanced level. CCTV News Network quoted him Tuesday night reported that the current world economic situation is complicated and confusing, the Chinese economy has been some impact, but the fundamentals of the economy has not changed the overall smooth running, good positive factor to support the economy on the rise. Li pointed out that, along with steady economic growth, enhanced structural adjustment to stimulate market dynamism, China has the ability to conditionally complete annual major economic objectives and tasks. Turning to the RMB exchange rate issue, he said, "Recently we improve the yuan central parity pricing, comply with the international financial market, the basis of the continued depreciation of the yuan does not currently exist, can be maintained at a reasonable and balanced level." RMB against the US dollar closing spot on Tuesday continued a four-year record low; also the end of the seven central parity rose, hitting near two-week low. Traders said the central bank highlights the central parity exchange rate market pricing intentions, but the session still figure the time is now to intervene, suggesting the yuan decline can be expected, but the material is not out of control. (Finish) =========== Tue Aug 25, 2015 | 4:46 PM EDT ‹ Traders work on the floor of the New York Stock Exchange August 24, 2015. Reuters/Brendan McDermid Traders work on the floor of the New York Stock Exchange August 25, 2015. REUTERS/Brendan McDermid Traders work on the floor of the New York Stock Exchange August 25, 2015. Reuters/Brendan McDermid A specialist trader is reflected on his screen on the floor of the New York Stock Exchange August 25, 2015. REUTERS/Brendan McDermid By Noel Randewich A strong rally on Wall Street evaporated on Tuesday and stocks ended with deep losses as concerns about China's economy outweighed lower valuations that some saw earlier as bargains. In a dramatic trading session, major indices turned negative in the final minutes of trading after previously climbing almost 3 percent. Investors cited more worries that a slowdown in China could hobble global growth, even after the country's central bank cut interest rates on Tuesday for the second time in two months. The move came after Chinese stocks slumped 8 percent on Tuesday, on top of an 8.5 percent drop on Monday. "People are still nervous about overseas and what might happen tonight. Nobody wants to sit around and see what happens," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. Tuesday's drop followed steeper losses on Monday, when the Dow Jones industrial average fell more than 1,000 points at its lows and the S&P 500 recorded its worst day since 2011. Home sales increase, consumer confidence improves In the past week, the S&P has lost 11 percent. "Investors are still concerned about exogenous growth and shifting Fed policy, and both of those are still on the table," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. The Dow Jones industrial average fell 204.91 points, or 1.29 percent, to end at 15,666.44. The S&P 500 lost 25.59 points, or 1.35 percent, to finish at 1,867.62 and the Nasdaq Composite dropped 19.76 points, or 0.44 percent, to 4,506.49. Earlier, the S&P rose as much 2.9 percent, the Dow as much as 2.8 percent and the Nasdaq as much as 3.6 percent. JPMorgan cut its year-end target for the S&P 500 to 2,150 from 2,250. All of the 10 major S&P sectors were lower, with the utilities index's 3.2-percent drop leading the decline. Pepco Holdings Inc fell 16.47 percent after a District of Columbia regulator denied Exelon Corp's $6.8 billion bid for the power utility, possibly delivering a knockout blow to the deal. Monday's pummeling pushed the S&P 500's valuation down to about 15 times expected earnings, compared to around 17 for much of 2015 and just above a 10-year average of 14.7, according to Thomson Reuters StarMine. Data on Tuesday showed U.S. consumer confidence increased to a seven-month high in August. New U.S. single-family home sales rebounded in July, adding to evidence of underlying strength in the economy that could allow the Federal Reserve to raise interest rates this year. Best Buy jumped 12.57 percent after the owner of the biggest U.S. electronics chain reported an unexpected increase in quarterly sales. Decliners outnumbered rising stocks on the NYSE by 1,721 to 1,384. On the Nasdaq, 1,480 issues fell and 1,379 advanced. The S&P 500 index showed just one new 52-week high and 47 new lows, while the Nasdaq recorded seven new highs and 125 new lows. Volume was heavy, with about 10.4 billion shares traded on U.S. exchanges, far above the 7.5 billion average this month, according to BATS Global Markets. Bridgewater's Dalio: Next big Fed move will be to ease, not tighten (Additional reporting by Tanya Agrawal, Saqib Iqbal Ahmed and Sinead Carew in New York; Editing by Nick Zieminski) ============= Mon Aug 24, 2015 | 5:09 AM EDT Great fall of China sinks world stocks, dollar tumbles Asia down as China woes unnerve markets ... By Marc Jones LONDON (Reuters) - Alarm bells rang across world markets on Monday as a 9 percent dive in Chinese shares and a sharp drop in the dollar and major commodities panicked investors. European stocks .FTEU3 opened more than 3 percent in the red after their Asian counterparts slumped to 3-year lows as a three month-long rout in Chinese equities threatened to get out of hand. [.SS] Safe-haven government bonds [EUR/GVD] and the yen JPY= and the euro EUR= rallied as widespread fears of a China-led global economic slowdown and currency war kicked in. "It is a China driven macro panic," said Didier Duret, chief investment officer at ABN Amro. "Volatility will persist until we see better data there or strong policy action through forceful monetary easing." With serious doubts now emerging about the likelihood of a U.S. interest rate rise this year, the dollar .DXY slid against other major currencies. It was last at 120.25 yen JPY= its lowest in three months. The Australian dollar AUD=D4 fell to six-year lows and many emerging market currencies also plunged [EMRG/FRX], whilst the frantic dash to safety pushed the euro EUR= to a 6-1/2-month high. [FRX/] "Things are starting look like the Asian financial crisis in the late 1990s. Speculators are selling assets that seem the most vulnerable," said Takako Masai, head of research at Shinsei Bank in Tokyo. Commodity markets took a fresh battering. Brent and U.S. crude oil futures hit 6-1/2-year lows as concerns about a global supply glut added to worries over potentially weaker demand from China. [O/R][GOL/] U.S. crude was down 3 percent at $39.20 a barrel CLc1 while Brent LCOc1 lost 2.4 percent to $44.40 a barrel. Copper, seen as a barometer of global industrial demand, tumbled 2.5 percent, with three-month copper on the London Metal Exchange CMCU3 hitting a six-year low of $4,920 a tonne. Nickel CMNI3 slid 4.6 percent to its lowest since 2009 at $9,730 a tonne. GREAT FALL OF CHINA The near 9 percent slump in Chinese stocks .CSI300.SSEC was their worst performance since the depths of the global financial crisis in 2009 and wiped out what was left of the 2015 gains, which in June has been more than 50 percent. The latest rout was rooted in investor disappointment that Beijing did not announce expected policy support over the weekend after its markets shed 11 percent last week. Compounding the real-time falls all index futures contracts <0#CIF:> <0#CIC:> <0#CIH:> slumped by their 10 percent daily limit, pointing to more bad days ahead. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 5.1 percent to a three-year low. Tokyo's Nikkei .N225 was down 4.1 percent and Australian and Indonesian shares .JKSE hit two-year troughs. "China could be forced to devalue the yuan even more, should its economy falter, and the equity markets are dealing with the prospect of a weaker yuan amplifying the negative impact from a sluggish Chinese economy," said Eiji Kinouchi, chief technical analyst at Daiwa Securities in Tokyo. There was further evidence that developed markets were becoming synchronized with the troubles. London's FTSE .FTSE which has a large number of global miners and oil firms, was down for its 10th straight day, its worst run since 2003. The pan-European FTSEurofirst 300 .FTEU3, meanwhile, was down 3.1 percent by 0830 GMT (0430 EDT) at 1,382.15 points, wiping around 260 billion euros ($298.61 billion) off the index and taking its losses for the month to more that 1 trillion euros. [.EU] U.S. stock futures also pointed to larger losses for Wall Street's main markets, with the S&P 500 ESc1, Dow Jones Industrial 1YMc1 and Nasdaq NQc1 expected to open down 1.8, 2.2 and 3.1 percent respectively. "We are in the midst of a full-blown growth scare," strategists at JP Morgan Cazenove said in a note. (Additional reporting by Pete Sweeney in Beijing and Shinichi Saoshiro Hideyuki Sano in Tokyo; editing by John Stonestreet and Anna Willard)

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