Tuesday, 11 August 2015 19:11
NEW YORK: US stocks sank in opening trade Tuesday after China’s surprise devaluation of the yuan, seen as a bid to prop up weaker Chinese exports that would further strengthen the dollar.
About five minutes into trade, the Dow Jones Industrial Average was down 147.89 points (0.84 percent) at 17,467.28.
The broad-based S&P 500 dropped 13.76 (0.65 percent) to 2,090.42, while the tech-rich Nasdaq Composite Index fell 23.65 (0.46 percent) to 5,078.15.
China shook markets after announcing Tuesday a sharply lower daily reference rate for the yuan against the US dollar — the 1.86 percent cut was the largest since the yuan was unpegged from the greenback in 2005. The government explained the move was part of making its exchange rate regime more market-oriented.
“Market participants see an alternate agenda given the timing of things,” said Patrick O’Hare of Briefing.com, noting weak Chinese trade data released last weekend that included a sharp fall in exports.
Wall Street sentiment was “pressured by the understanding that the yuan’s weakness could ultimately translate into further dollar strength, which would further crimp earnings prospects for US multinationals and further weigh on dollar-denominated commodity prices,” O’Hare said.
