Stock futures slump as China further devalues the yuan

“U.S. stock index futures fell sharply for a second day in a row on Wednesday as China pushed the yuan lower again, exacerbating fears about a global economic slowdown,” Tanya Agrawal reports for Reuters.

“The yuan hit a four-year low with spot yuan dropping as low as 6.4510 per dollar, its weakest since August 2011, after the Chinese central bank set its daily midpoint reference at 6.3306, even weaker than Tuesday’s devaluation,” Agrawal reports. “China’s surprising move has led to speculation that the U.S. Federal Reserve will wait until December to raise rates.”

“Automakers with a big exposure to China also fell again. Shares of General Motors Ford Motor and Fiat Chrysler were all down 1 to 4 percent premarket,” Agrawal reports. “Apple fell 1.2 percent to $112.08 and was on course to dip to its lowest in more than six months.”

Read more in the full article here.

MacDailyNews Take: Contagion.

$110, here we come!

Apple poised for pain – and gain – on China’s move to devalue the yuan – August 11, 2015
Morgan Stanley: This is your chance to buy shares of Apple at a discount – August 6, 2015


    1. Oil price is driven by how much oil is available. The world market, right now in the U.S. domestic is cheap because we have a huge supply; this drive down prices in the world market. One of the reasons, I believe number one, the GOP and some Dems are against the Iran deal is if passed Iran will flood the market with cheep oil. This is great for non oil producing nations like China and Japan. Bad for the US and Saudi Arabia. There are other important concerns. However how can Israel claim it’s better for Iran to be months away from making a bomb instead of over a decade? Follow the money. Even for the Dems support. Less money for the oil rich GOP donors and more money middle class.

    2. I view this as China experimenting with the pupit strings they have on the world economy. It is a known that there is a history of corruption within the Chinese government. Would it be any stretch to expect some Chinese officials to manipulate the value of the yuan to make huge amounts of money on the world stock exchanges?

      The U.S. SEC should be looking at all aspects of our stock markets in terms of national security, stability, and honesty. Interesting that the Chinese government could so easily manipulate the world stock exchanges. They could do far more damage around the world much faster, longer lasting, and with minimal expenditure of their resources than with a military strike, and do it all so “innocently” with no overt act of aggression.

      The U.S. Stock markets are so easily manipulated that it seems criminal. Not to mention that it leaves the stability of the U.S. Economic system totally exposed to covert manipulation. Regulators (Our totally dis-functional bipolar D&R congress) should be dealing with this threat but they are blinded by partisanship and controlled by Wall Street.

    1. Why are you trolling here? You’re not making sense. We all know very well that this is a third party force of fear in the stock market that actually has very little to do with Apple. China getting real about the ACTUAL value of the Yuan is good for everyone. It means lower wages Apple has to pay (not that I ever, even once, approved of Apple using slave wage labor in China). The worst that will happen is Apple gear in China becomes effectively more expensive.

      That’s going to tank Apple? Here’s a great idea: Let’s share some popcorn, watch and see. I’ve seen this movie a dozen times before. But I’ll sit through it and watch again just for you. 🙄

  1. Yes Mainland China is a problem. However Apple lists Greater China that includes Taiwan and Hong Kong. Taiwan has its own currency and can benefit from this. I am not sure about Hong Kong. Apple can too because it will be cheaper for them in other markets. Remember China is becoming their number one market, it is not yet.

  2. This works 2 ways for Apple. Lower component and labor costs (because of a cheaper Yuan) but higher cost of products in China.
    Also the wealthier segment of consumers who buy Apple products in China are usually not as affected by economic downturns as the less fortunate group. Therefore sales of iPhones in the mainland may not be affected as much as originally thought.

    1. Example… As of yestedays 1.9% devaluation of yuan..A 1000$ iphone would cost 1019…
      Now do u believe the chinese customer who was prepared to dish out a 1000 for the phone wont dish out 1019 ..?
      All of this is assuming Apple gets zero benifit with his suppliers and manufactures in china with the stronger dollar.
      But they do ! Which improves their margins overall and everywhere else in the world by the way! !

      And apple also has the option to lower prices in china and transfer the benefits to the chinese consumers if they feel the 19 dollar increase is going to have a material effect on sales.
      Net effect.. Same margins in china….
      Better margins in the rest of the world.
      Lowering yuan improves Chinese exports which helps Chinese economy which helps the consumers splurge.
      And yet look at the dismal picture wall street is painting for Apple !
      Apple is going to be fine.. And right know they are enjoying their buybacks at a nice discount !

  3. Three years ago, I predicted that there will come a time when the income from sales of Apple products in China will pay for the entire product line, manufactured in China, for sale in the rest of the world. From the last quarter, it would appear that this time has or is shortly to arrive.

    This goes to show how stupid the analysts are: the fall of the yuan actually makes Apple products cheaper without any currency exchange! This is a ++ for Apple, but Anal-ysts can’t see it, AGAIN!

  4. As this incident points out, yet again: Finance is a GAME. A country full of cheaters got caught and got pressured to GET REAL (or thereabouts) regarding the value of the Yuan. The game gets more honest and reliable. There’s no downside to that, despite the effect of raising Apple gear prices in China.

      1. Yes indeed! We’re also finding out that China has made this world demand for realistic Yuan values in to an opportunity for an actual currency war. They’re being slow and subtle about it. But this is now the THIRD day they’ve lowered their currency. As they continue, the obvious benefit to them is bashing the competition with even cheaper labor and cheaper exports. No doubt they’d rather sell their cheaper products inside China as well.

        IOW: This has turned out to be NOT simply a realignment of the Yuan to a realistic level of value. China is now shoving the value down even further, to its own advantage.

        Typical China chicanery. 🙄

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