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Get up to date with what’s moving global markets this morning.
(Bloomberg) --
The U.S. labels China a currency manipulator. Asian equities are poised to plunge after U.S. stocks got pummeled on China’s yuan play. And Beijing will hold another briefing to address the unrest in Hong Kong. Here are some of the things people in markets are talking about today.
Currency Manipulator
The U.S. Treasury Department has officially labeled China a currency manipulator after the country’s central bank allowed the yuan to fall below 7 per dollar in retaliation for new tariffs on its imports. Cowen's Chris Krueger called Beijing's retaliation "massive," noting "on a scale of 1-10, it's an 11." Morgan Stanley strategist Michael Zezas said tariffs are more likely to be enacted as pressure builds on the Fed to make deeper rate cuts. BMO strategist Ian Lyngen said the biggest unknown is how much further the yuan will fall. The currency’s slide threatens to revive concerns about the capital flight that helped prompt the country to spend $1 trillion of its reserves in 2015.
Poised to Plunge
Asian equity futures suggest the bloodbath in stocks will continue after U.S. equities had their worst rout of the year on China allowing the yuan to tumble in retaliation to President Trump's tariff threats. The S&P 500 fell almost 3% from its recent record high, while the Dow plunged 767 points. Treasuries jumped, with 10-year yields falling about 11 basis points. Trump accused China of currency manipulation, and called on the Fed to respond. "Are you listening Federal Reserve?" the U.S. president tweeted. "This is a major violation which will greatly weaken China over time!" His trade battle with China is starting to look like a forever war—a quagmire with no end in sight.
Unrest Continues
Beijing will hold its second press briefing on Hong Kong in as many weeks on Tuesday, the SCMP reported. China lacks good options for handling unrest in the city and may ask for recommendations from a group of key residents to buy time, political scientist Ivan Choy said. The local government condemned as "violent acts" attacks on at least two police stations amid a citywide strike on Monday.
Crypto Calm
Investors looking for a place to hide are finding an unlikely safe haven: Bitcoin. Securities such as sovereign bonds and gold rose as China fired back in the trade war, but so too did major cryptocurrencies. They're increasingly seen as a refuge during distressed times, with Bitcoin gaining more than 14% and smaller peers including XRP and Litecoin each rising more than 5%. The Swiss franc led G-10 currencies on traditional haven buying, which also sent gold higher.
Central Bank Action
The RBA will probably hold rates steady on Tuesday following back-to-back rate cuts, according to all analysts surveyed. While Governor Philip Lowe has left the door open for further easing, he'll wait to see how earlier actions filter through to the Australian economy, especially the rebounding property market, economists said. On Wednesday, New Zealand policy makers are expected to cut.
What we’ve been reading
This is what’s caught our eye over the last 24 hours.
- North Korea fires more unidentified missiles.
- World's richest people lose $117 billion in the market meltdown.
- The outlook for Australia's retail stocks is gloomy.
- Vietnam won the trade war, but now it’s in trouble.
- Modi provokes Pakistan with the boldest Kashmir move in 70 years.
- Tech giants risk privacy probes over Alexa, Siri eavesdropping.
- Silicon Valley’s latest unicorn is run by a 22-year-old.
To contact the editor responsible for this story: Alison Ciaccio at aciaccio1@bloomberg.net
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