BEIJING (AP) - Asian stock markets wavered and the region's currencies tumbled Tuesday after China unexpectedly devalued its tightly-controlled yuan in response to weakening trade and growth.
BEIJING (AP) — Asian stock markets wavered and the region's currencies tumbled Tuesday after China unexpectedly devalued its tightly-controlled yuan in response to weakening trade and growth.
KEEPING SCORE: China's Shanghai Composite Index shed 0.4 percent to 3,912.86 while Hong Kong's Hang Seng gained 1 percent to 24,755.51. Tokyo's Nikkei 225 lost 0.9 percent to 20,624.96 and Sydney's S&P/ASX 200 declined 0.7 percent to 5,470.50. Seoul's Kospi was little changed at 2,003.35. The Australian dollar sank 1.3 percent to $0.7330. The U.S. dollar also gained against the yen, Indian rupee, South Korean and other Asian currencies.
CHINA'S DEVALUATION: Beijing's devaluation of the yuan allowed it to fall by its biggest one-day margin in a decade. The central bank said the 1.3 percent decline was due to changes aimed at making the way it sets exchange rates more market-oriented. In recent months, the yuan has strengthened along with the U.S. dollar as currencies of other developing countries weakened, hurting Chinese exporters. Exports fell by an unexpectedly large 8.3 percent in July. The People's Bank of China said market forces would be given a bigger role in setting the exchange rate, leaving open the possibility of more declines.
THE QUOTE: China's yuan announcement "looks to be a move to a more open market policy," said Stephen Innes, senior trader at OANDA. "Traders are looking for U.S. dollar strength across the Asia region and pressure on all local currencies," he said. "The market is extremely volatile at moment."
WALL STREET: The market had its best day in three months, propelled by resurgent energy stocks and another big acquisition by Warren Buffett. Energy stocks followed the price of oil higher. Industrial stocks climbed after Buffett's Berkshire Hathaway agreed to buy Precision Castparts, a maker of industrial components, for $32 billion. The Standard & Poor's 500 rose 26.61 points, or 1.3 percent, to 2,104.18. It was the biggest gain for the index since May 8. The Dow Jones industrial average rose 241.79 points, or 1.4 percent, to 17,615.17. The Nasdaq composite climbed 58.25 points, or 1.2 percent, to 5,101.80.
FED WATCH: Some investors are anticipating that the Federal Reserve will raise interest rates next month. That unnerves them because rates close to zero have been a major factor in driving a bull-market in stocks that has lasted for more than six years.
ENERGY: Benchmark U.S. crude shed 39 cents to $44.58 per barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $1.09 to $44.96 on Monday. Brent crude, used to price international oils, lost 33 cents to $50.08 after soaring $1.80 the previous session to $50.41.