Published: Fri, August 09, 2019
Markets | By Erika Turner

Wall Street climbs over 1pc after China moves on yuan

Wall Street climbs over 1pc after China moves on yuan

Economists say that allowing the yuan to fall will potentially turn the ongoing trade war into a currency war.

Bond prices continued to rise sharply, sending yields to their lowest level in almost three years.

Traders are selling riskier assets after Monday saw the biggest one-day plunge in global equities since February 2018, fearing an escalation in the trade war will spur a global recession.

Asian shares were mixed Wednesday as markets calmed after China's decision to stabilize its currency. Doing so this time opens the door for United States tariffs to eventually increase to more than 25 percent on Chinese goods, says DBS will likely escalate tensions between the two countries. The S&P 500 fell 87.31 points, or 2.98 percent, to 2,844.74.

Big technology stocks, longtime investor favorites, also posted hefty losses.

During the regular session, Apple gained 1.9 per cent after recent heavy losses while the Philadelphia Semiconductor index edged 1.28 per cent higher. The Russell 2000 index of smaller companies picked up 14.67 points, or 1 percent, to 1,502.09. Shares in Europe rose sharply, while major indexes in Asia snapped multiday losing streaks.

"Whether the US economy is strong enough to withstand the next phase of a trade war is giving people concern right now", said Mike Loewengart, vice-president of investment strategy at E*Trade Financial in NY.

Investors are concerned that Beijing is using its currency in an escalating trade war with U.S. President Donald Trump.

"It's too early to even try and associate this with any form of optimism given the events of the last week", said Craig Erlam, senior market analyst at OANDA.

'Review your decisions': India warns Pakistan after latter decides to downgrade relations
He said the ambassadors of P5 countries were summoned to the Foreign Office and Pakistan's concerns were conveyed to them. Pakistan announced on Wednesday that it is downgrading its diplomatic ties with India and suspending bilateral trade.

Technology stocks led the gains in a reversal of Monday's slump, when they bore the brunt of the market sell-off that pushed US indexes 3 percent lower.

Gold rose $34.90 to $1,507.30 per ounce, silver rose 75 cents to $17.16 per ounce and copper rose 2 cents to $2.57 per pound.

CVS Health Corp rose 6.03 percent after the drugstore chain posted profit above estimates, boosted by strong sales in the Aetna health insurance business it acquired a year ago.

Communications services companies also notched solid gains. Nike shares rose by nearly 3 percent. Aircraft components maker TransDigm jumped 13.7 percent after raising its profit forecast and delivering solid quarterly earnings. The energy sector was down more than 1% after oil prices slid while real estate was up the most of any S&P sector.

A government report suggesting a cooling USA job market kept bond yields in check after an early gain.

Trump tweeted Thursday that he would place an additional 10 percent tariff on the remaining 300 billion US dollars worth of Chinese imports starting on September 1.

The market's turbulent turn comes less than two weeks after the benchmark S&P 500 hit an all-time high.

With the second-quarter earnings season winding down, about 73% of the 426 S&P 500 companies that have reported results so far have topped earnings estimates.

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