Market Update & Important Indicators
U.S. financial markets were closed Monday for the Labor Day holiday. In Europe the Stoxx Europe 600 clawed back some of the losses suffered last week to end the session 0.5% higher. The London FTSE also gained 0.5%, while the German DAX and French CAC added 0.7% and 0.6% respectively.
China-driven volatility returned to Asian markets Monday, with Shanghai leading most of the region's markets lower on renewed concerns about China's economy. Shares in Japan rose slightly but most stock benchmarks in the region fell, after China cut its growth rate for last year to 7.3% from 7.4%. The jobs report in the U.S. Friday refocused investors' attention on the possibility the Federal Reserve would raise short-term interest rates in September, sending currencies such as the Malaysian ringgit and Indonesian rupiah to fresh 17-year lows against the U.S. dollar.
In Shanghai, the main benchmark veered between positive and negative, before closing down 2.5%. Investors took the intraday gains (the market was up as much as 1.8% in the morning) as an opportunity to take profit after the market had been closed last Thursday and Friday for a national holiday. The day's losses came despite soothing comments from the governor of China's central bank over the weekend and more efforts by authorities to contain market turbulence.
After the market close, Chinese authorities announced that the country's foreign-exchange reserves fell by $93.9 billion in August from July, as the nation's central bank intervened in the currency market to shore up the yuan and prevent capital flowing out of the world's second-largest economy.
The Australian dollar traded at a fresh six-year low below US$0.6900 Monday, as concerns about world growth and talk of recession in the local economy kept buyers on the sidelines. The currency traded briefly at US$0.6892, a low level not seen since the market panic associated with the global financial crisis.
Copper traded 0.6% higher on the LME overnight, although other base metals were mixed. Iron ore added 0.6% to $56.85/t, while Brent and WTI crude both fell, the former losing 4.0% to $47.63/bbl. Gold traded slightly lower at $1,123/oz.
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