(Bloomberg) -- U.S. equity futures rose alongside European stocks while Asian shares fell after China moved to stabilize its currency, helping ease some of the market turmoil that kicked off the week.
The global sell-off in equities abated after China fixed its yuan exchange rate at stronger than 7 per dollar, a key level that when breached in markets on Monday fueled the rout. Three main U.S. stock-index futures all gained along with Stoxx Europe 600, while the benchmark MSCI Asia Pacific Index fell for a fifth session. The yen pulled back from its strongest closing level in more than one year. Bitcoin advanced, with its week-long rally carrying the digital token back above $12,000 for the first time three weeks.
The dollar nudged lower and gold held on to Monday's gains. The pound strengthened as opponents of a no-deal Brexit hardened their plans to stop Prime Minister Boris Johnson from possibly trying to leave the European Union with no agreement. Treasuries gave back some of their surge from yesterday, when they reached the most extreme yield-curve inversion since the lead-up to the 2008 financial crisis. Oil edged higher.
Investors are contemplating the week's brutal start that was triggered by yet another escalation in the trade struggle between the two largest economies. China's move to stabilize the yuan on Tuesday offered some reassurance. But it came too late to avoid the "manipulator" designation that could open the door to new penalties on top of the tariff hikes already imposed on Chinese goods. U.S. Treasury Secretary Steven Mnuchin will now "engage with the International Monetary Fund to eliminate the unfair competitive advantage created by China's latest actions," the department said in a statement.
For its part, China said the recent yuan depreciation was decided by the market, not Beijing, and denied the Trump administration's accusation.
"The key thing is that they've shown they are willing to play with that 7 level," Andrew Sullivan, Pearl Bridge Partners director, said on Bloomberg TV. "The market really doesn't have a firm grip on how far the currency could go."
Elsewhere, Australia's dollar rebounded, only briefly trimming gains after its central bank kept rates unchanged at record lows and said "an extended period" of low rates will likely be required. The country's bonds rallied, sending the 10-year yield below 1% for the first time. Japanese rates fell below the central bank's target range.
These are some key events to watch out for this week:
Here are the main moves in markets (all sizes and scopes are on a closing basis):
--With assistance from David Ingles, Cormac Mullen and Andreea Papuc.
To contact the reporter on this story: Laura Curtis in London at email@example.com
To contact the editors responsible for this story: Samuel Potter at firstname.lastname@example.org, Todd White
For more articles like this, please visit us at bloomberg.com
©2019 Bloomberg L.P.