Worries China will lower US asset purchases hits markets

LONDON — Speculation that China may cut or even halt its purchases of U.S. Treasurys weighed on stock markets Wednesday and sent the dollar sliding.

KEEPING SCORE: In Europe, Germany's DAX fell 0.8 percent to 13,280 while the CAC 40 in France declined 0.2 percent to 5,500. The FTSE 100 index of leading British shares was steady at 7,729. U.S. stocks were poised for a lower opening with Dow futures and the broader S&P 500 futures both down 0.4 percent.

CHINA CONCERN: In a report, the Bloomberg news agency said unnamed officials in Beijing have recommended slowing or actually halting purchases of U.S. Treasurys. Given that China is a major buyer of U.S. Treasurys U.S. assets have taken a hit.

ANALYST TAKE: "If the reports turn out to be true .... the repercussions could be significant as the country is one of the biggest holders of U.S. debt," said Craig Erlam, senior market analyst at OANDA. "A significant change in policy could put considerable upside pressure on U.S. yields, the result of which would be an effective tightening for the U.S."

DOLLAR: The dollar was hit hard by the reports. The euro was up 0.6 percent at $1.2005 while the dollar fell 1.1 percent to 111.39 yen.

JAPAN CENTRAL BANK: A drop in the scale of long-term bond purchases by the Bank of Japan on Tuesday has triggered speculation over further "tapering" of asset purchases. That pushed the Japanese yen higher against the dollar, denting some exporters' shares.

THE DAY IN ASIA: Japan's Nikkei 225 index lost 0.3 percent to 23,788.20 and the Kospi in South Korea lost 0.4 percent to 2,499.75. Australia's S&P ASX 200 slipped 0.6 percent to 6,096.70. The Hang Seng index in Hong Kong climbed 0.2 percent to 31,073.72 and the Shanghai Composite index added 0.2 percent to 3,421.83.

ENERGY: Benchmark U.S. crude oil rose 71 cents to $63.66 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, added 48 cents to $69.29 per barrel.

Canada tests 'basic income' effect on poverty...

Nov 29, 2017

Canadian authorities are engaged in an unusual experiment in which a basic minimum income with no...

Deaths of Canadian billionaire, wife a...

Jan 22, 2018

The deaths of one of Canada's wealthiest men and his wife remain a tantalizing mystery

Canada proposes tightening controls on gun sales

Mar 20, 2018

Gun retailers in Canada would be required to keep records of firearms inventory and sales for at...

Amnesty Denmark regrets translating advice to US...

Mar 3, 2017

The head of the Danish chapter of Amnesty International says it was "a terrible mistake" to print a...

The Latest: Report: Egg scandal suspect denies...

Aug 11, 2017

Dutch media are reporting that a suspect in Europe's contaminated egg scandal is denying involvement

Financial Markets

Market Sanctum is one of the world’s leading news sources for the currency trading community. Our analysts report on the latest changes in the current market, providing in-depth analysis.

Contact us: sales[at]marketsanctum.com