(Bloomberg) — U.S. stock-index futures rebounded, erasing earlier declines, after China’s central bank set its currency fixing stronger than expected.
S&P 500 Index futures contracts expiring in September rose as much as 0.7% as of 1:06 p.m. in Tokyo as the yuan steadied. contracts ascended 0.6% while those on the added 0.5%.
S&P 500 futures recovered after falling as much as 1.9% after the Trump administration formally labeled China a currency manipulator. The move exacerbated trade worries after China’s central bank on Monday allowed the yuan to fall in retaliation for new U.S. tariffs.
U.S. futures gained after the People’s Bank of China set its daily reference rate at 6.9683 per dollar on Tuesday. That compared with an estimated 6.9871, according to the average of forecasts by 19 traders and analysts in a Bloomberg survey.
“As soon as 7 broke on the CNY, the obvious reaction by the Trump administration was to call China a currency manipulator,” said Nader Naeimi, AMP Capital’s head of dynamic markets in Sydney. “But I don’t know how you can call someone a currency manipulator when all they have done has been to keep the currency from depreciating.”
Naeimi said it’s possible that the market is in for a global stock selloff that’s as bad as the one seen during the fourth quarter of last year. “Seasonals are turning negative as well. We are seeing breakdowns across most market bellwethers across FX, equity and bond markets,” he said.
The S&P 500 suffered its biggest rout of the year Monday and bonds rallied as investors fretted about the escalating trade war. More than $700 billion was wiped from the value of U.S. equities, with the S&P 500 Index plunging 3% and all but 11 companies on the gauge trading lower. The Cboe Volatility Index surged about 40%.
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