Global stocks headed sharply lower for a second straight day
Wednesday, following China's devaluation of the yuan amid a
slowdown in the world's second-largest economy.
The pan-European Stoxx Europe 600 index fell 2.0% in early
trade, dragged down by exporters and commodity-linked companies
that are sensitive to demand from China. Germany's exporter-heavy
DAX index fell 2.3%.
Shares in luxury goods firms Burberry Group PLC and LVMH Moë t
Hennessy Louis Vuitton were down were down 3.6% and 3.5%,
respectively. Car maker Peugeot SA fell 4.3% and Daimler AG was
down 3.8%. Mining firm Glencore PLC was down 5.0% and steelmaker
ArcelorMittal SA fell 3.3%.
The yuan, on track for its largest two-day loss on record of
3.7%, fell as much as 1.98% Wednesday to 6.4510 in late afternoon
trade, closing in on the weakest level regulators allow the
currency to trade each day.
A weaker yuan could hurt the competitiveness of firms outside
China by making their goods and services relatively more expensive.
Companies that sell goods in China could find revenues generated in
yuan are worth less in their home currency.
The Chinese yuan fell 1.6% against the U.S. dollar Wednesday
after the People's Bank of China set its daily reference rate to
the buck down 1.6% from Tuesday's rate.
The move followed the central bank weakening the yuan by almost
2% Tuesday.
Stocks in Asia were down across the board, while local
currencies weakened against the dollar for the second day in a
row.
Hong Kong's Hang Seng index fell 2.4%, Japan's Nikkei 225 index
dropped 1.6% and China's Shanghai Composite Index was down
1.1%.
The euro rose 0.5% against the U.S. dollar to $1.1094.
Brent crude oil was down 0.2% at $49.06 a barrel. Gold was up
0.8% at $1,116.30 a troy ounce.
Write to Christopher Whittall at
christopher.whittall@wsj.com
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