Updated throughout the day.
August 25
Yesterday’s woes have become today’s wails for China as the Shanghai Composite Index closed at its lowest level in 8 months, settling at 2,953.42. The Shenzhen Composite Index meanwhile ended at 1,749.07 points, down 7.09%. On the plus side, China’s decline today seemed a little less contagious as the rest of the world edged toward recovery.
Bargain hunters in Asia and Europe have at least helped keep things stable with all the major bourses in Asia closing in positive territory. The obvious exception was China, but Japan also stood out when – despite a positive start to do day – it closed down 4%.
Europe, meanwhile is on firmer footing compared to yesterday when 450 billion euros ($520.70 billion) was wiped off leading markets. The pan-European FTSEurofirst 300 index has now clawed back 1.7% of more than 5% it had lost. Here is what else you need to know:
China is not giving up on intervention. The central bank lowered interest rates and reserve requirements. That’s not all, the PBoC pumped in billions of yuan into the system. The Telegraph, PBoC (Chinese), Xinhua
Oil prices rebound. After getting absolutely hammered the past couple of weeks, oil prices have finally staged a comeback with WTI crude climbing 77 cents to $39.02, while Brent soared 74 cents to $43.43 a barrel. The fundamental factors behind its drop however, remain fully in place. Financial Times
Xi channels Mao. Just as Chairman Mao did in 1959, President Xi Jinping is currently moving to grant amnesty to select prisoners languishing in China’s prison system. Among the requirements needed to secure a pardon: the prisoner must have fought against Japan and the Kuomintang, as well as not having been convicted of bribery or embezzlement. Xinhua
Japanese Finance Minister is not cool with the yen’s rise. Speaking to the press, Japanese Finance Minister Taro Aso said that the yen’s recent “rough” climb against the greenback might place undue pressure on the Japanese economy, adding: “for the economy to grow stably, it’s better for (currency and stock price) moves to be gradual and steady, rather than rough.” CNBC
The Kremlin bans Wikipedia. Moscow took its internet censorship initiative up a notch this week after the Roskomnadzor, Russia’s internet regulator, placed Wikipedia on its list of blocked sites following the fracas surrounding it’s recent article on Charas, which appears to be some sort of hashish derivative. Financial Times
France honors train attack heroes. French President François Hollande bestowed the Legion of Honor – the highest decoration in France – to the four men who thwarted Friday’s harrowing massacre attempt, saying: “Today the whole world admires your courage, sang-froid and responsibility…this Legion of Honor rewards your courage but also the formidable act of humanity.” Wall Street Journal
Jeffrey Gundlach is still concerned about the markets. The DoubleLine Capital co-founder says that the turmoil isn’t over yet. Corrections take more than a couple days, and the market is wounded. Gundlach says he’s concerned about China’s growth, as well as redemptions in risk-asset-based ETFs and mutual funds.Reuters
Koreas shake hands, hug. Well, not literally, but they did reach an agreement Monday to deescalate tensions. South Korea got the apology it wanted over the North’s military action that injured Southern soldiers, and the South says it will stop broadcasting propaganda at the North. CNN
Nepal protest claims nine lives. Protests over Nepal’s new draft constitution escalated into a veritable bloodbath as demonstrators, armed with domestic weapons, attacked police officers in Kailali, stabbing several officers and even setting one on fire. New York Times
You won’t believe this:
Starbucks baristas are now happier to serve you. Sounds a little scary I know but apparently Starbucks CEO Howard Schultz urged his staff to be extra nice to people following Black Monday, saying: “today’s financial market volatility, combined with great political uncertainty both at home and abroad, will undoubtedly have an effect on consumer confidence and perhaps even our customers’ attitudes and behaviour…Let’s be very sensitive to the pressures our customers may be feeling, and do everything we can to individually and collectively exceed their expectations.” The Telegraph
Photo: PughPugh