Stock Markets Down on Global Worries
Asian stocks hit 17-month lows on Tuesday as investor concerns about the state of the global economy continued to pressure markets. Japan’s Nikkei 225 was down 1.31 percent as of 1:14 p.m. HK/SIN. South Korea’s Kospi eased 0.60 percent and Australia’s ASX 200 was 0.88 percent lower. Chinese markets rebounded slightly after a selloff on Monday, with the Shanghai Composite up 0.49 percent and the Shenzhen Composite up 0.23 percent. On Monday the Nasdaq suffered its third consecutive day of losses, prompted by the sell-off in China on Monday.
On Monday Beijing announced a reduction in the level of cash that banks must hold as reserves, a move whose goal is to lower financial costs and encourage growth that may be hindered by the U.S-Sino trade war.
The IMF cut forecasts for global growth for this year and next and downgraded its outlook for Europe, China and the United States, sparking fear among investors that led them to withdraw from the markets. On Tuesday, China’s central bank fixed the yuan to 6.9019 per dollar which led speculators to push the greenback up to 6.9320 in the spot market. The devaluation of the yuan is expected to help Chinese exporters and it did help encourage the uptick in Chinese stock prices on Tuesday. Some analysts expect the yuan to hit 7.0 against the dollar by the end of the year. U.S. officials have expressed concern at the fall in the Chinese currency though U.S. Treasury Secretary Steven Mnuchin hasn’t yet confirmed whether he would meet with Chinese officials about the issue this week. On Monday, U.S. Secretary of State Mike Pompeo met with Chinese Foreign Minister and State Councillor Wang Yi in Beijing to discuss the current trade war. The meeting, attended by reporters, was apparently quite tense, and included criticism and attacks from both sides.