Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Chinese state media have said that the United States was “deliberately destroying international order,” a day after Washington branded Beijing a currency manipulator in an escalating trade war. Donald Trump tweeted the accusation after a sharp drop in the yuan beyond the seven-to-one-dollar rate for the first time since 2008.
The US Treasury secretary, Steven Mnuchin, then also accused China of manipulating its currency “to gain unfair competitive advantage in international trade”. The US will now ask the International Monetary Fund to “eliminate the unfair competitive advantage created by China’s latest actions”.
China’s official Communist Party newspaper, the People’s Daily, said in an editorial that the US was holding its own citizens to ransom, Reuters reported.
The responsibility of big countries is to provide the world with stability and certainty while creating conditions and opportunities for the common development of all countries, according to the editorial.
“But some people in the United States do just the opposite,” it said.
After losing more than 2% in recent days, since Trump threatened fresh 10% tariffs on $300bn of Chinese imports from 1 September on Friday, the yuan has steadied. Today, the People’s Bank of China set set the yuan fixing at 6.9683, stronger than expected.
However, Asian stock markets are a sea of red again as traders worry about the impact of the trade tensions on the global economy. The escalation has caused a major sell-off on world markets in recent days. On Wall Street, the Dow Jones and the S&P 500 indices both closed nearly 3% lower yesterday while in the London, the FTSE 100 index tumbled 2.47%.
- Japan’s Nikkei down 0.65% at 20,585
- Hong Kong’s Hang Seng down 1.14% at 25,853
- China’s CSI 300 down 1.22% at 3,630
- South Korea’s Kospi down 1.17% at 25,845
- Singapore’s Straits Times down 0.81% at 3,168
European shares are also expected to open lower.
The economic calendar looks pretty bare today. We’ve had German factory orders for June this morning, which were surprisingly strong. They rose 2.5% from the previous month, bringing some respite after Germany’s recent manufacturing slump. However, the figures tend to be volatile.
The Australian central bank held interest rates at an all-time low of 1% and its governor Philip Lowe said it was “reasonable to expect that an extended period of low interest rates will be required in Australia”, to boost employment growth and inflation. He will appear before a parliamentary committee on Friday and is likely to be asked about the impact of the US-China trade war.
8:30am BST: Markit Germany Construction PMI (July)