It was another short trading day for Chinese investors as markets were open for trading for a total of 14 minutes. A 15-minute suspension came in to play after 12 minutes as the market fell by 5%, and once trading was resumed (for a further 2 minutes), the index fell to -7%, breaching the second threshold and thus closing the markets early, for the second time this week. The reason for the fall? The PBoC setting the Yuan (the onshore renminbi) 0.5% weaker today at 6.5646 per dollar. This is the 8th consecutive weakening, but the lowest since August and the currency is now at its lowest level since March 2011. It raises fresh and further questions as to whether Chinese authorities are able to manage the apparent slow down in the world’s second largest economy.
Brent oil also suffered from dramatic falls today, trading below $33 a barrel during European trading. Oil and mining stocks subsequently dragged the FTSE 100 lower as prices for commodities fell amid worries on China’s seemingly slowing economy. Anglo American and Glencore ended the day as the biggest fallers in the UK, closing down 11% and 8% respectively. China, being the world’s largest consumer of many metals, including copper and zinc, forced the metal prices lower. The falling yuan only adds to the ongoing troubles metals are under: imports are more expensive for China whilst making the country’s exports cheaper, albeit at a time when there is an oversupply in most commodities.
Following on from Next’s trading update on Monday, Marks & Spencer were the latest high street retailer to give an update on their Christmas trading. They reported a 5.8% fall in general merchandise sales (including clothes) in their third quarter, partly blaming the “unseasonably warm weather” for falling sales. However, food sales for M&S were up 0.4% in the quarter and the group claimed to have record sales in the Christmas week. Also in the announcement was the news that chief executive Marc Bolland is to step down in April, to be succeeded by Steve Row, the current executive director of general merchandise. Investors initially reacted positively to the trading statement, before turning negative during trading. The shares ended the day as one of only three stocks (in the FTSE 100) to be in the green today, closing +0.1%.
At the close European indices were down with the FTSE 100 -2.0%, the CAC 40 -1.7%, and the DAX -2.3%.