European markets have dropped in early trading on Tuesday, led lower by a pullback in the price of oil and weaker Chinese markets after the People’s Bank of China lowered its reference rate for the yuan by the most since January.
The drop in the yuan comes as a bit of a shock after People’s Bank of China Governor Zhou’s comments last weekend had soothed concerns of an intentional depreciation. There was a sense that the PBOC might leave the yuan alone until at least after the G20 meeting this week.
The oil price is lower with heightened worry over Iranian production cited as the reason for a natural pullback after gaining as much as 8% intraday on Monday.
After surging on Monday, basic resource shares are at the bottom of the FTSE 100 as the market temperament shifts from risk on to risk off. Shares of housebuilder Persimmon (L:PSN) topped the UK benchmark after reporting well-received earnings.
BHP Billiton (L:BLT) shares dropped over 3% after the world’s biggest mining company slashed its interim dividend by 75% on Tuesday in response to a gigantic $5.67bn half-year loss. The move follows in the footsteps of other miners which have ditched progressive dividend policies to protect credit ratings while earnings remain low.
Shares of Standard Chartered (L:STAN) crashed nearly double digits after the Asian-focused bank reported a surprise -$2.36bn net loss for 2015 driven by bad loans to slowing Asian economies and the commodities industry.
US markets look set for a lower open on Tuesday in line with the fall in Asia and a decline in the price of oil ahead of quarterly earnings results from retailers Macy's (N:M) and Home Depot (N:HD) and the release of consumer confidence data.
USA pre-opening levels
S&P 500: 13 points lower at 1,932
Dow Jones: 112 points lower at 16,508
Nasdaq 100: 37 points lower at 4,194
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