The People’s Bank of China’s “one-off depreciation” of the yuan triggered a chain reaction across global markets and all the asset classes amid rising concerns that Asia’s largest economy is headed for a deeper slowdown.
The Standard Poor’s 500 Index dropped 1 percent by 4 p.m. in New York, oil plummeted to a six-year low and emerging-market equities slipped. Gold futures slid to $1107.70 in New York on Tuesday, giving away most of its earlier gains after touching a high of $1119.10. On the other hand, treasuries rallied as investors weighed the aftermath of the unexpected move.
“It’s disappointing after one day of recovery to see oil roll back over, rates come back down and the market weaker,” Tom Wright, the New York-based director of equities at JMP Securities LLC, said by phone. “We spend a lot of time obsessing over Greece or Puerto Rico but China is a much bigger economy and a much bigger problem to the global economy and devaluing the currency is shaking people up.”
Coming to currencies, the PBOC move sparked fears of