Wall Street stocks stumbled early in the week after China unexpectedly devalued its currency, but steadied thereafter on solid US data.
All three indices ended with gains for the week, with the Dow Jones Industrial Average adding 104.02 points (0.6 percent) to 17,477.40. The broad-based S&P 500 rose 13.97 (0.67 percent) to 2,091.54, while the tech-rich NASDAQ Composite Index increased 4.7 (0.09 percent) to 5,048.24.
FTN Financial chief economist Chris Low said initial “panic” over the Chinese policy receded as the week wore on.
“People are beginning to realize that perhaps they overreacted, but China has dominated conversations,” he said.
The Dow lost more than 200 points on Tuesday after China’s central bank devalued its yuan currency by nearly 2 percent against the US dollar, as authorities said they were seeking to push market reforms, in the context of a slowing economy.
That move and further devaluations in subsequent days raised concerns about a strengthening US dollar and whether the Chinese economy is weaker than thought.
Analysts also rued a potential “currency war” if other economies seek to devalue currencies.
However, China’s central bank soothed markets on Friday by setting the daily reference rate of the yuan against the US dollar marginally higher, ending an almost 5 percent fall over three days.
US data showed a solid gain in industrial production and higher wholesale prices. The most anticipated report, last month’s retail sales, rose 0.6 percent behind large gains in auto purchasing and advances in most other categories.
While retail sales bested analyst expectations, a batch of earnings from large companies in the sector sent conflicting signals.
On the weak end was Macy’s Inc, which reported a 25.7 percent drop in second-quarter earnings to US$217 million, missing expectations by a wide margin.
Much better were results from the upscale department store chain Nordstrom Inc, which lifted its outlook for the year following a 15.3 percent rise in second-quarter earnings to US$211 million behind higher sales.
DOLLAR CHALLENGE: BRICS countries’ growing share of global GDP threatens the US dollar’s dominance, which some member states seek to displace for world trade US president-elect Donald Trump on Saturday threatened 100 percent tariffs against a bloc of nine nations if they act to undermine the US dollar. His threat was directed at countries in the so-called BRICS alliance, which consists of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates. Turkey, Azerbaijan and Malaysia have applied to become members and several other countries have expressed interest in joining. While the US dollar is by far the most-used currency in global business and has survived past challenges to its preeminence, members of the alliance and other developing nations say they are fed
LIMITED MEASURES: The proposed restrictions on Chinese chip exports are weaker than previously considered, following lobbying by major US firms, sources said US President Joe Biden’s administration is weighing additional curbs on sales of semiconductor equipment and artificial intelligence (AI) memory chips to China that would escalate the US crackdown on Beijing’s tech ambitions, but stop short of some stricter measures previously considered, said sources familiar with the matter. The restrictions could be unveiled as soon as next week, said the sources, who emphasized that the timing and contours of the rules have changed several times, and that nothing is final until they are published. The measures follow months of deliberations by US officials, negotiations with allies in Japan and the Netherlands, and
Foxconn Technology Group (富士康科技集團) yesterday said it expects any impact of new tariffs from US president-elect Donald Trump to hit the company less than its rivals, citing its global manufacturing footprint. Young Liu (劉揚偉), chairman of the contract manufacturer and key Apple Inc supplier, told reporters after a forum in Taipei that it saw the primary impact of any fresh tariffs falling on its clients because its business model is based on contract manufacturing. “Clients may decide to shift production locations, but looking at Foxconn’s global footprint, we are ahead. As a result, the impact on us is likely smaller compared to
TECH COMPETITION: The US restricted sales of two dozen types of manufacturing equipment and three software tools, and blacklisted 140 more Chinese entities US President Joe Biden’s administration unveiled new restrictions on China’s access to vital components for chips and artificial intelligence (AI), escalating a campaign to contain Beijing’s technological ambitions. The US Department of Commerce slapped additional curbs on the sale of high-bandwidth memory (HBM) and chipmaking gear, including that produced by US firms at foreign facilities. It also blacklisted 140 more Chinese entities that it accused of acting on Beijing’s behalf, although it did not name them in an initial statement. Full details on the new sanctions and Entity List additions were to be published later yesterday, a US official said. The US “will
RSS