World stocks rebound as China soothes yuan weakness fears

U.S. stock futures are pointing up Thursday.


Dow e-minis were up 54 points, or 0.31 percent, with 26,873 contracts changing hands.

“Financial markets in South Korea, Malaysia and commodity-producing emerging markets will probably continue to suffer the biggest losses if the renminbi depreciates further against the dollar“, analysts at Capital Economists wrote in a research note. Economic weakness – which had been in plain sight for around five years – will run its course.

MISSED: The department-store chain Kohl’s turned in quarterly sales and earnings that fell short of estimates.

The spot market opened at 6.3990. Its stock lost $3.17, or 5%, to $64.37. First and foremost, China’s stock market has always remained small in proportion to the size of its economy, as well as the fact that Chinese companies are not almost as dependent on equities for fund raising as their counterparts are in the United States or the United Kingdom.

China’s government said its moves were attempts to make the country’s exchange rate more responsive to the market.

“To be honest, while I’ve been reading about the free fall, the circles I’m exposed to here in Shanghai and across central China appear to have been relatively unaffected”, said Thomas Dunlop, the regional account manager of central China for Navitas, a wealth management firm. Businesses in parts and intermediate goods welcomed what they see as a potential boost in exports to China.

G4S – the British company whose services include running prisons and protecting airports – dropped 5.4 per cent after both Goldman Sachs and Exane BNP Paribas cut their ratings on the stock. “However, there may not be any large positioning ahead of the weekend and any gains in the risk asset markets are expected to be modest”.

Anxiety gave way to relief on global markets as China’s central bank eased concern that a shock currency devaluation would trigger broader financial turmoil.

The global forecast for the Asian markets suggests little movement, with caution likely the order of the day following recent currency-based volatility.

The Dow Jones industrial gained 20 points, or 0.1 percent, to 17,421 as of 11:45 a.m. Eastern time.

Malaysia’s gross domestic product rose 4.9 percent last quarter from a year earlier, more than the 4.5 percent median estimate in a Bloomberg survey, data showed on Thursday. On the Nasdaq, 1,164 issues fell and 1,058 advanced.

Oil prices gained Thursday, edging up from a six-year low in New York on news US oil supplies declined.

The midpoint is a guiding rate set by the government, from which trade can rise or fall 2% during the day.


CURRENCIES: The dollar strengthened to 124.47 yen from 124.42 yen in the previous trading session.

US stocks wobble after a second day of weakening in China's currency, then