Update: Or was that risk Off again?
Someone tried to make the point that the making the Yuan more flexible was already "priced in"; well it might be of course, but so far markets are bathing in serious risk on mode. Copper futures up some 4.5%, AUD/USD at 0.88ish and I could go on and on ...
Asia shares rose the most in almost seven months, U.S. and European stock index futures climbed and commodities advanced after China signaled it will relax the yuan’s fixed rate to the dollar. Treasuries fell.
The MSCI Asia Pacific Index rallied 2.8 percent to a six- week high of 119.42 at 3:15 p.m. in Tokyo. Futures for the Standard & Poor’s 500 Stock Index climbed 1.7 percent and those for the Euro Stoxx 50 added 1.6 percent. Oil increased 2 percent to $78.77 a barrel and copper jumped 4.3 percent. The yuan appreciated the most in 20 months versus the dollar. U.S. Treasury 10-year notes fell for a second day. The People’s Bank of China said it will end a two-year currency peg adopted during the global financial crisis to protect exporters, in a sign policy makers see the world economy strengthening. Commodity and industrial companies lead gains in Asian stocks on optimism for increased sales in the world’s third-largest economy.
“It’s a vote of confidence in Asia and in risk appetite and a reduction in the dangers of a trade war,” said Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney. “The currencies of Asian nations, which are close competitors with China on the trade front, should do well.” The MSCI Asia index climbed the most since Nov. 30. The Nikkei 225 Stock Average jumped 2.4 percent and the Hang Seng Index rallied 2.8 percent to lead all regional benchmarks. Australia’s S&P ASX/200 Index advanced 1.4 percent and South Korea’s Kospi Index gained 1.5 percent.