TOKYO (Reuters) - Asian shares pushed higher on Friday, clawing back earlier losses in volatile trade as China’s stocks recovered sharply and the yuan bounced from a one-year low with market participants suspecting state support for the currency.
A man looks at an electronic board showing stock information at a brokerage house in Shanghai, China July 6, 2018. REUTERS/Aly Song
The yuan took a beating earlier in the day after the central bank set a weaker fixing for the currency for the seventh straight session, adding to the anxiety in Asian markets, which remain sensitive to any sharp moves in the yuan.
MSCI’s broadest index of Asia-Pacific shares outside Japan was last up 0.55 percent after falling as much as 0.4 percent earlier.
Spreadbetters expected European stocks to open lower, with Britain’s FTSE falling 0.1 percent and Germany’s DAX and France’s CAC both shedding 0.25 percent.
The yuan’s latest bout of weakness, catalysed by concerns over the brewing China-U.S. trade war and a slowing Chinese economy, has seen the it shed 7.6 percent of its value against the dollar since the end of the first quarter of this year.
“There are several channels through which the yuan’s weakening is hitting Asian stocks. First, a weaker yuan challenges the competitiveness of other Asian economies,” said Shusuke Yamada, currency and equity strategist at Bank of America Merrill Lynch in Tokyo.
“The weaker currency also causes fears of capital leaving China and disrupting their capital markets, which could have knock-on effects on Asia. Lastly, a weaker yuan deepens trade war concerns.”
The yuan fell to as low as 6.8128 to the dollar in the onshore market, before reversing course to last trade at 6.777 for a gain of about 0.05 percent.
China’s stocks bounced
