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Market Update

Slide in Yuan Roils Asian Currencies; Rupee, Rupiah, Ringgit at Multi-Year Low

Author: Nichole Harper
Last Update: 5:41 PM ET August 12 2015

5:40 PM New York City, New York – World currency markets were roiled after China let yuan slide for the second day in a row. Currencies in India, Australia, New Zealand, Indonesia and Malaysia hit multi-year lows. Indexes on Wall Street swung wildly but managed to trim losses of the day at close.

Market indexes on Wall Street wildly swung after China let its currency slide further for the second day in a row.

Yuan declined by 1.5% on the second day after losing 2% in the previous session and traders speculated that the currency may fall as much as 10% as policy makers look for ways to support exporters.

In Shanghai, yuan traded as low as 6.45 against a dollar, lowest since August 2011, as the People’s Bank of China widened the trading band for the currency.

In international trading, yuan dropped to as low as 6.588 against a dollar and three months futures traded near 7 to the U.S. dollar.

The devaluation by China hit hard currencies across Asia. Rupee in India dropped to a new yearly low and rupiah in Indonesia declined to a 17-year low and ringgit declined to a two-decade low. Dollar in Australia and in New Zealand dropped to a six-year low.

On Wall Street, Tollbooth Strategy Index decreased 135.57 or 1.3% to 10,655.11.

S&P 500 index slipped 25.64 or 1.1% to 2,060.76 and the Nasdaq Composite Index decreased 65.18 or 1.3% to 4,971.67.

Crude oil in New York edged down 0.03 cents to $43.05 a barrel and gold jumped $16.70 to $1,124.40 an ounce.

U.S. Movers

Alibaba Group Holding Ltd (BABA) declined 6.4% or $4.93 to $72.39 after the China-focused online and mobile marketplaces reported total revenues in the first-quarter ending in June jumped 28% to $3.27 billion from a year ago period.

Net income in the quarter climbed 148% to $4.97 billion and diluted earnings per share increased 129% to $1.92 compared to the same period a year ago.

Revenue growth slowed in the quarter as more traffic originated on the mobile devices, which lowers advertising yields. Gross merchandise volume jumped 34% to 673 billion yuan, slowest increase in three years.

Alibaba also announced its plan to repurchase $4 billion of its shares over the next two years to stem the dilution from the stock-based compensation program.

General Electric Company (GE) slid 19 cents to $25.51 after the diversified conglomerate agreed to sell its healthcare financial services business to Capital One Financial Corporation for $8.50 billion.

Separately, GE also agreed to divest healthcare financial services real estate equity investments to another unnamed buyer for about $600 million.

European Markets

UK unemployment rate for the three months to June increased to 5.6% from 5.5% in the three months to March but dropped from 6.3% in a year ago period, the Office of the National Statistics said.

Industrial output in June fell 0.4% in the euro area and 0.2% in the wider region of EU28 from May. In May, production slid 0.2% in euro area and 0.1% in the wider region of EU28, the Statistical Office of the European Communities reported today.

In London trading, FTSE 100 index dropped 121.99 or 1.8% to 6,542.42 and in Frankfurt the DAX index declined 366.36 or 3.2% to 10,932.53.

In Paris, CAC 40 index plunged 371.98 or 3.4% to 4,926.50.

E.ON SE slid 0.09% to €11.69 after the Germany-based utility provider reported revenues in the first-half ending in June jumped 5% to €57.30 billion from €54.78 billion in a year ago period.

Net profit in the period soared 40.1%from a year ago to €1.15 billion compared to €821 million and diluted earnings per share jumped to €0.59 from €0.43.

E.ON forecasted operating profit for the year between €7 billion and €7.6 billion.

Henkel AG & Co KGaA plunged 7.8% to €100.50 after the Germany-based detergent maker said revenues in the first-half ending in June soared 13.1% to €9.13 billion from €8.07 billion in a year ago period.

Net profit in the period climbed 12.3% from a year ago to €1.01 billion compared to €902 million and diluted earnings per share increased to €2.28 from €2.05.

Pearson Plc slid 0.7% to 1,165 pence after the U.K.-based education and media group agreed to sell its 50% stake in the Economist Group, the publisher of The Economist to Exor S.p.A for £469 million or $730 million in cash to focus on education assets.

The Italy-based Agnelli family is the largest investor in Exor.

The transaction is expected to close in the fourth-quarter of this year.

Asian Markets

Nikkei average dropped for the second day in Asia-wide correction following the 2% yuan devaluation. Industrial production in Japan rose 1.1% in June and shipment increased 0.6% form the last month.

Online real estate information provider Next Co. said quarterly revenues soared 42%.

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Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc