On Monday, Asian markets to recoup from five consecutive sessions of losses as a strong Chinese yuan eased investors’ worries on devaluation.
In Japan, the Nikkei 225 advanced 7.20%, slightly offsetting the largest decline since 2008 of 11% last week. Meanwhile, the S&P/ASX 200 was up by 1.34%.
Despite the gains helped by the 1% surge in yuan, investors and analysts still remain worried.
The Shanghai Composite, on the other hand, lost 0.70% during its first session following the week-long Lunar New Year break.
However, despite the upbeat performance in Asia, the 11.20% fall in China’s January exports and 18.80% drop in January imports continue to outweigh.
Stronger Yuan, Weaker Trade
The People’s Bank of China (PBOC) decided to lift its daily midpoint by 0.30%.
Zhou Xiaochuan, PBOC Governor, believes that there is no reason to further devaluate the currency.
China recorded a $63.03 billion trade balance surplus, well above analysts’ expectations of $58.85 billion.
The poor trade date of China indicates that Asia’s largest economy is still experiencing from severe economic slowdown. According to analysts, it suggests the weakness in both “external demand and fixed asset investment” in the country.
Furthermore, some analysts believe that the markets are still extremely volatile due to the timing of the Lunar New Year.
However, the latest Chinese retail sales data encouraged a little hope in the world’s second largest economy with an 11.20% increase during the Lunar New Year holidays compared to the same period in the previous year.
The GDP of Japan lost an annualized 1.40% in the fourth quarter due to pressing economic woes.
US and European stocks ended Friday’s session stronger, contributing to Asia’s boost on early Monday.
The NASDAQ Composite rose 1.66 percent; the S&P 500 surged 1.95 percent; the Dow Jones Industrial Average rallied 2%. This ended a five-day losing streak but all three major indices still lagged for the week.
Oil prices also inched up 12% on Friday after reports said that the Organization of the Petroleum Exporting Countries (OPEC) might move to cut global production rate in response to the worsening supply glut.