Chinese stocks are up and about having being walloped in recent weeks

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  • Chinese stocks are ripping higher on Monday, leading a broad-based rally across the region.
  • The Chinese yuan is also stronger, helping to boost Asian currencies against the greenback.
  • The moves follow strong gains in stocks, and weakness in the US dollar, in European and US trade on Friday.

Chinese stocks are ripping higher on Monday, leading a broad-based recovery across the Asian region.

Here’s the performance of major Chinese stock indices, as well as the Chinese yuan, as at 1.45pm in Sydney.

Shanghai Composite 2,792.57 , 1.65%
SSE50 2,450.57 , 2.00%
Shenzhen Composite 1,564.41 , 1.85%
CSI300 3,434.38 , 2.06%
CSI500 5,075.39 , 1.58%
Hang Seng 28,821.54 , 1.54%
USD/CNY 6.5973 , -0.28%
USD/CNH 6.6318 , -0.44%

All are trading higher, helping to spur on strong gains in most stocks and currencies across the region.

Here’s how major stocks indices across the region are faring.

Australia ASX 200 6286.00 , 0.22%
NZ NZX 50 9060.60 , -0.26%
Japan TOPIX 1710.78 , 1.14%
Shanghai Comp 2792.57 , 1.65%
Shenzhen Comp 1564.41 , 1.85%
HK Hang Seng 28751.27 , 1.54%
Sth Korea KOSPI 2292.44 , 0.86%
Sinagpore STI 3217.23 , 0.80%
Taiwan TAIEX 10729.23 , 1.14%
Philippines PSI 7180.49 , -0.09%
Indonesia JKSE 5758.91 , 1.12%
Malaysia KLCI Index 1670.61 , 0.41%
Thailand SET 1623.17 , 0.52%
S&P 500 Futures 2773.75 , 0.39%

And Asian currencies against the US dollar.

AUD/USD 0.7460 , 0.43%
NZD/USD 0.6840 , 0.21%
USD/JPY 110.43 , -0.01%
USD/CNY 6.6218 , -0.27%
USD/CNH 6.6318 , -0.44%
USD/HKD 7.8473 , -0.01%
USD/KRW 1110 , -0.40%
USD/SGD 1.3557 , -0.10%
USD/TWD 30.34 , -0.30%
USD/PHP 53.33 , 0.04%
USD/MYR 4.035 , -0.07%
USD/IDR 14335 , -0.21%
USD/THB 33.09 , -0.15%
USD/INR 68.59 , -0.31%
US Dollar Index 93.88 , -0.16%

The strong moves in both stocks and currency markets mirror those seen in European and North American trade on Friday, seemingly pushing aside the possibility of an escalation in trade tensions between in the United States and China.

On Friday, the US and China both implemented tariffs on $US34 billion of the others imports.

US President Donald Trump said the US will apply an additional $US16 billion in tariffs on Chinese in two weeks time, as stated previously, while warning that he was considering slapping additional tariffs on $US500 billion worth of Chinese imports, essentially the entire value of Chinese imports into the US last year.

Clearly, markets don’t believe that will happen given the scale of the moves seen today, even with Trump following through with his promise late last week.

Sentiment is no doubt being supported by a stronger Chinese yuan, something investors have been paying close attention to in recent months, especially those in Australia and emerging markets.

The USD/CNH — the US dollar compared to the offshore-traded yuan — is currently trading at 6.6318, a decrease of 0.44%. This implies the yuan has strengthened against the greenback.

News that China’s FX reserves unexpectedly increased in June, lifting to $US3.112 trillion from $US3.111 trillion in May may explain the scale of the move, suggesting the PBoC did not have to dip substantially into its foreign-denominated holdings to prevent the yuan from falling even further during the month.

China’s State Administration of Foreign Exchange (SAFE), a department within the PBoC, said the increase in reserves was due to a fall in non-USD denominated currencies over the month, as well as changes in asset prices.

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