Shares in Asia fell Thursday, as the outlook for the timing of a rise in U.S. interest rates remains cloudy and investors brace for the impact of the International Monetary Fund’s signals that it won’t add the yuan to its basket of reserve currencies for at least a year.
In Japan, the Nikkei 225 index gave back yet another 189.11 points, or 0.9%, to 20,033.52
In Hong Kong, the Hang Seng Index removed 410.38 points, or 1.8%, to 22,757.47. The index has fallen more than 20% from a high reached in April, the definition of a bear market.
Minutes from the Federal Reserve’s July meeting provided no clear sign of having settled on whether to raise interest rates in their September meeting, given wide-ranging views about factors from U.S. economic data to the role of China’s slowing growth.
U.S. stocks have rallied in the years of the Fed’s ultralow interest-rate policy, a tactic mirrored by other global central banks and markets. The prospect of higher interest rates could dim the outlook for corporate profits and futures stock gains.
Oil prices fell to a fresh six year low overnight after data showed a surprise increase in U.S. stockpiles, adding to the glut of crude around the globe. Worries about future demand as the Chinese economy loses steam have also weighed on commodity prices.
CHINA
In China, the CSI 300 erased 124.68 points, or 3.2%, to 3,761.45, after a volatile day of trading Wednesday that rippled into global markets.
On Thursday, China’s central bank set the yuan’s trading midpoint sharply stronger, at 6.3915 per U.S. dollar, compared with 6.3963 a day earlier. The currency can trade within a 2% band above or below that. It last traded at 6.3915 against the U.S. dollar.
China’s currency has held steady for the past several days in the wake of the tumult sparked by the central bank’s move to devalue the yuan last week. The central bank has kept the yuan’s daily fixing within a fraction of the levels set on previous days.
Late Wednesday, the IMF’s executive board approved an extension of the current basket of reserve currencies included in its special drawing rights to Sept. 30, 2016. The move confirms an earlier proposal for a delay in the five-year reshuffling of the basket, which currently doesn’t include the yuan.
The move was another blow to the Chinese currency, which suffered its biggest one day loss in two decades last week after the devaluation. China said the move was part of a plan to allow the market a greater role in exchange rates.
In other markets
In Korea, the Kospi index shed 24.83 points, or 1.3%, to 1,914.55
In Singapore, the Straits Times Index lost 31.47 points, or 1%, to 3,009.78
In Taiwan, the Taiex index went against the tide and gained 7.97 points, or 0.1%, to 8,029.81
The NZX 50 subtracted 8.82 points, or 0.2%, to 5,742.46
The ASX 200 Index moved lower 91.6 points, or 1.7%, to 5,288.59
