Wall Street Tumbles after China Devalues Yuan

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Wall Street Tumbles after China Devalues Yuan

Wall Street Tumbles after China Devalues Yuan

US stocks slid with the Dow Jones Industrial Average falling by more than 200 points on worries that China’s devaluation of its currency signaled increasing concern over the economic growth of the world’s biggest importer of raw materials.

The Dow Jones Industrial Average most recently fell 242 points or 1.42% at 17,373 points wiping out the previous session’s gains.

The S&P 500 benchmark Index most recently traded 25 points or 1.11% lower at 2079 points to completely reverse Monday’s gains.

The tech heavy Nasdaq Composite fell by 72 points or 1.4% to 5,030 points.

“We are looking at a pullback right now. The news of the Yuan raises suspicion regarding the economic growth outlook for China, that’s taking its toll on the markets,” Peter Cardillo, chief market economist at Rockwell Global Capital in New York, told Reuters.

The People’s Bank of China, the country’s central bank, on Tuesday morning moved to devalue its tightly controlled currency, the Yuan, following weaker than expected Chinese import and Export data over the weekend.

The move was the latest in a series of efforts by Beijing to halt the selloff it the country’s equities and to prop up the country’s economy.

“It’s another step by the People’s Bank to support the economy and stabilize the economy, which continues to weaken,” Craig Bishop, lead strategist of U.S. fixed-income strategies at RBC Wealth Management, told the Wall Street Journal.

“A slowdown in an economy of that size causes a lot of ripples.”

The devaluation, described as a one-off depreciation by the central bank, saw the dollar jump to its highest in more than three years against the Yuan further pressuring commodities.

The devaluation also boosted demand for treasuries and gold, which are seen as safe havens against market and economic volatility, and pressured commodities like oil; already battered by the ongoing glut.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com