Xi Jinping’s reelection to a third term as General Secretary of the Communist Party of China led to a drop in shares of China and a drop of 7.3% to 5,019.96 points in China’s companies index. The figure was the lowest since the 2008 global financial crisis, Bloomberg reported, citing Hong Kong bourse trading data.
“The Hang Seng China Enterprises Index, an indicator of Chinese stocks listed in Hong Kong, fell 7.3 percent, posting its worst performance since any Communist Party congress since the index was created in 1994,” the report said.
Xi’s reelection led to an exodus of foreign investors from mainland China and a plunge in major Chinese companies stocks. Against this backdrop, they began selling a record number of shares through trading links in Hong Kong. As a result, this led to a 3% drop in the CSI 300 index, which unites shares of major companies by capitalization in Shanghai and Shenzhen. This factor also led to a weakening of the yuan.
“The onshore (exchange rate formed directly in China’s domestic market) yuan fell as much as 0.6% to its lowest level since January 2008,” the article reported.
On October 24, CNBC reported that China’s economic growth accelerated to 3.9% in the third quarter of 2022. This figure was higher than forecasted by international analysts, who expected China’s GDP to increase by only 3.4%.
China stock market closed in the red amid protests in China
The Chinese stock market chart closed in the red, recording its worst session in a month, as recent measures to ease monetary policy could not offset investor concerns about protests against tight covenant restrictions in the world’s second-largest economy.
China once again recorded record numbers of coronavirus infections on Monday following protests across the country against strict covid restrictions.
Amid concerns, investor sentiment on China’s stock market couldn’t be much affected by the People’s Bank of China, which said on Friday it will lower requirements on the amount of funds banks must hold as reserves for the second time this year, freeing up about 500 billion yuan ($69.8 billion) of long-term liquidity to support the slowing economy.
In turn, consumer and tourism-related stocks rose, as some investors bet that the recent COVID-19 outbreaks and social unrest could push China to end its “zero tolerance” COVID-19 policy earlier.
Earlier we reported that the gold price was showing moderate gains in reaction to the US Federal Reserve meeting minutes.
Gold price today shows moderate growth, reacting to U.S. Federal Reserve meeting minutes
Gold prices today are rising, trading data show. Markets are processing the minutes of the November meeting of the U.S. Federal Reserve (Fed).
Forex gold price on the New York Comex rose $8.35, or 0.48%, to $1,753.95 a troy ounce. December silver futures rose 0.44% to $21.46 an ounce.
Investors pay attention to the minutes of the Federal Reserve meeting published this week. The document indicated that the regulator considers it expedient to slow down the rate of interest rate increases soon. According to the CME Group, 71.1% of analysts forecast a new 50 basis point hike in December after a 75-point increase in November.
The monetary policy easing is having a negative impact on the dollar. The dollar index (the exchange rate against a basket of currencies of six U.S. trading partners) is down nearly 1% for the week. The cheaper the U.S. currency, the more expensive gold becomes as it becomes more available for purchase in other currencies. The yellow metal has been showing a rise of about 1% since Monday.
Earlier we reported that the U.S. dollar is stable against the euro and yen and rising against the pound.
The US dollar rate is stable against the euro and the yen and goes up against the pound
In today’s trading the US dollar rate is stable against the euro and the yen and is strengthening against the pound. A day earlier, the dollar weakened against the world’s major currencies following the release of the Federal Reserve’s (Fed) November meeting minutes, which showed that the overwhelming majority of U.S. central bankers see the need to slow down the pace of rate hikes soon.
The ICE index that shows the dollar’s movement against six currencies (euro, Swiss franc, yen, Canadian dollar, pound and Swedish krona) lost 0.17% on Friday, while the broader WSJ Dollar Index was stable.
Current dollar rate
The euro/dollar pair was trading at $1.0411, up from $1.0410 at the close of the previous session. The dollar was trading at 138.61 yen against the Japanese yen at the same time, compared to 138.54 yen the previous day. The pound exchange rate fell to $1.2103, compared to $1.2113. Yesterday the dollar was 0.2% cheaper against the euro, 0.7% cheaper against the yen, and 0.5% cheaper against the pound.
“Some of the Fed leaders observed that monetary policy had reached a state in which it was sufficiently restrictive to meet FOMC goals and it would be appropriate to slow rate hikes. The vast majority of meeting participants felt that slowing the pace of the hike would probably be appropriate in the near term,” noted the minutes of the Nov. 1-2 Fed meeting.
Some of the U.S. central bank leaders, meanwhile, believed that the Fed would have to raise the rate higher than previously planned to meet its goal of easing inflation.
They indicated that the rate “would have to reach a somewhat higher level than previously expected,” given the lack of enough signals of easing in U.S. inflation at the moment, as well as the continuing imbalance of supply and demand in the economy.
Earlier we reported that Italian Enel plans to sell assets for 21 billion euros to reduce debt.
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