The markets are having a rough adjustment to the return of the Chinese markets are the week-long holiday. The cut in the required reserves failed to lift investor sentiment. The Shanghai and Shenzhen Composites fell almost 4%, and the yuan slid nearly 0.8%. It is an unusually large decline for the closely managed currency.
The offshore yuan fell by a little more than 0.5%. There are appears to have been a jump in offshore sales of mainland shares through the stock connect facilities. Japanese markets are closed for a national holiday, which spared, for the time being, the erosion of equities throughout the region. European shares are losing ground for a third session.
Italy’s bond continues last week’s slide,, induced by the confrontation with the EU over the 2019 budget. Core bond yields are lower. The dollar is firmer against nearly all major and emerging market currencies, though the risk-off mood has seen the yen and Swiss franc resist the greenback’s pull. Emerging market equities are broadly lower, and South Africa, China, Russia, and Turkey currencies are the weakest.
