China closes 2% higher but other markets fall after US jobs data – as it happened

Martin Farrer in Sydney, Graeme Wearden and Nick F

from on 2016-01-08 17:48 (#ZZXD)

Investors have been buoyed by the People's Bank of China's decision to boost the yuan for the first time in nine days. US jobs showed stronger than expected growth, prompting rate hike talk

5.59pm GMT

And in Europe the FTSEurofirst 300 fell 7% over the course of the week, marking its worst weekly performance since August 2011 amid the eurozone crisis.

On that, gloomy, note it's time to close the blog after what has been a tumultuous week. Thanks for all your comments, and we'll be back on Monday to cover all the week's financial developments.

5.47pm GMT

To add to the New Year market gloom, the FTSE 100 has made its worst weekly start to the year since 2000. The Dow Jones Industrial had already recorded its worst ever 4-day opening at the start of the year and the modest rise so far on Friday is unlikely to improve things, unless there is a major revival before the close.

5.23pm GMT

A poor week for global stock markets finished in negative fashion despite earlier hopes of a recovery. The volatility and chaos caused by disappointing Chinese data and the failed attempt to control the country's stock market with circuit breakers had sent investors running for the hills this week. But a 2% rise in the Chinese market earlier on Friday, following the abandonment of the circuit breakers and some support from the authorities for the yuan, gave some hope that a better day was in prospect.

Better than expected US jobs figures put an end to that, prompting talk of further US rate rises and pushing the dollar higher, and by extension the oil price lower. With all the other geopolitical problems - North Korea's possible hydrogen bomb, tensions between Saudi Arabia and Iran - as well as Chinese inflation data this Saturday, traders decided to take their money off the table ahead of the weekend.

A degree of calm in Chinese markets overnight has done little to placate sentiment, whilst better than expected employment data out of the US is also adding to woes. As global growth projections are trimmed whilst the Federal Reserve eyes the next interest rate hike, across the board it seems as if the economy will now face sustained headwinds.

4.10pm GMT

One of the reasons for the decline in markets since the initial enthusiasm for the US jobs data is the feeling that the strong figures make a rate rise more likely. The disappointing wages growth might mitigate against an early rise, but the general feeling seems to be that even dearer borrowing costs are now more likely. Chris Beauchamp, senior market analyst at IG, said:

Heading into the close, the FTSE 100 has given up all its gains for the day, finishing a tough week on a miserable note.

After a passable performance overnight for the Chinese market, hopes were high that stock markets in Europe and the US could claw back some of their own losses. So far on this side of the pond, that has not been the case.

3.36pm GMT

Here's our economics editor Larry Elliott on the US jobs data:

It seems just like the good old days. Almost 300,000 jobs were added to payrolls in America in the last month of 2015, continuing the upward trend of recent months. The US is once again living up to its reputation for being a gigantic jobs machine.

Well, perhaps. Jobs are certainly being created at a good lick and the US has an unemployment rate - 5% - that the eurozone, at 10.5%, would die for. There are signs that people who had given up hope of finding work are being encouraged back into the labour market.

3.30pm GMT

Markets are flagging after the initial burst of enthusiasm following the US jobs data. On Wall Street the Dow Jones Industrial Average is now up 51 points, the FTSE 100 is just 2 points higher while Germany's Dax is down 42 points.

Connor Campbell, financial analyst at Spreadex, said:

Initially buoyed by a bombastic non-farm figure the global indices couldn't sustain their surge, the US open ending up not being the white knight the European markets were looking for.

Perhaps the superb non-farm figure (at 292,000 against the 203,000 expected and an upwards revised 252,000 last month) was tempered by falling wage growth (at 0.0% against the 0.2% forecast) and an unchanged unemployment rate. Or perhaps investors aren't willing to take too much risk into the weekend, especially with the prospect of another awful start to Monday on the cards. Either way the Dow couldn't manage to match the gains its futures were promising, at points flagging in the same way the European indices have done for much of the day.

3.09pm GMT

Here's something to put the latest US jobs figures in context:

US Unemployment Rate Dec 2015: 5% Dec 2007: 5% Full Time Jobs 2015: 122.8m 2008: 123.2m Population +15m BLS data (2)

3.03pm GMT

Back with China, and here's a graphic showing all the recent intervention in the country's stock market:

What else can the PBOC do? How China has intervened in its stock market: https://t.co/EzMRSeYKRf $ASHR $FXI pic.twitter.com/1grfJwMHMq

2.58pm GMT

IG's Joshua Mahony is not surprised by the fluctuations in the dollar following the non-farm payroll report:

That dollar rally didnt last too long. Fully expected to see any big move revert back to square one as is so often the case on jobs day #NFP

2.55pm GMT

But not everyone agrees. Economist Nina Skero at the Centre for Economics and Business Research does expect a US rate rise, but perhaps not until the third quarter of the year:

Overall, the data add to the view that the US economic recovery steams ahead as wage gains and the unemployment rate approach long-run norms and as job creation figures, which admittedly can be rather volatile, remain high.

In the aftermath of December's historic Federal Open Market Committee decision and this week's data releases perhaps the question on the minds of many is what is the future of US monetary policy? It is important to keep in mind that as one swallow does not a summer make, one rate hike does not a normalized monetary policy make. Even with the December rise interest rates in the US remain low and although the committee has restated its intention to maintain an accommodative monetary policy, it is reasonable to expect further hikes in 2016 - an expectation further strengthened by today's strong labour market data.

2.48pm GMT

Here's someone who thinks the Federal Reserve could raise US interest rates at its March meeting despite the uninspiring wage data. Harm Bandholz, chief US economist at UniCredit Research said:

Average hourly earnings were only flat between November and December. But thanks to a positive basis effect, the year on year rate ticked up to 2.5% from 2.3%. But while the Fed has said at a number of recent occasions that it puts more emphasis on the actual development of inflation rates when determining the appropriate path for short-term interest rates, we think that the unambiguous display of strength in the labor market will continue to bolster the confidence of FOMC members that (a) consumer spending will continue to power the US economy ahead - despite global headwinds, and (b) that faster wage gains will eventually lift domestic inflation rates. Accordingly, we continue to expect three rate hikes for 2016, with the next one coming at the March meeting.

To be sure, the labor market in the fourth quarter of 2015 most likely benefited from two special factors. First, there was a technical rebound in October, after the August and September numbers disappointed (in part due to seasonal adjustment issues). And in November and December, the unusually mild winter weather clearly supported employment in weather-sensitive areas, notably construction.

There is, however, in our view no reason at all to question the underlying message of today's and the previous couple of employment reports: The US labor market continues to be red-hot despite daily reports of global economic headwinds and financial market turmoil. The reason for this resilience - as highlighted at several occasions - is that most of the value added and of the job creation in the US occurs in the services sector, which is barely affected by global developments. And this trend strengthened further in 2015. After in 2014 81% of jobs were created in services, this number rose to a whopping 94% in 2015; with another 10% coming from the construction sector! That leaves a very small share of the labor market exposed to the adverse impacts of global economic headwinds and low oil prices.

2.33pm GMT

#Commodities (even #gold) unfazed by strong US jobs report: big #NFP gains suggest growth fears overdone, but wage data won't yet worry Fed.

2.33pm GMT

As expected after the better than expected US jobs figures, Wall Street has moved ahead in early trading.

The Dow Jones Industrial Average has added 110 points or 0.6% while the S&P 500 is up 0.4% and the Nasdaq 0.7%.

2.25pm GMT

Here's our story on the US non-farm payrolls:

2.24pm GMT

More detail on the US jobs:

Employment in mining continued to decline in December (-8,000). After adding 41,000 jobs in 2014, mining lost 129,000 jobs in 2015, with most of the loss in support activities for mining.

2.18pm GMT

Further consideration of the wages data - and the implications for the Federal Reserve to hold fire on another rate rise - has seen the dollar lose some of its initial strength in the wake of the figures.

Against the pound, the US currency is at $1.4572 compared to $1.4556 earlier.

2.11pm GMT

On the wages figures, Alex Lydall at Foenix Partners said:

Not all components were positive in today's payroll print with Average Hourly Earnings being a particular concern falling 0.2% below forecasts. More jobs being created can only be seen as good news, but with hourly earnings lagging, labour cost inflation is still a slight concern to Janet Yellen.

2.09pm GMT

The strong payrolls number has vindicated the Federal Reserve's decision to raise rates in December, said Rob Carnell at ING Bank, but the next increase may not come until June. He said:

However, aside from this strong headline, there is not much else to get too excited about. The unemployment rate stood unchanged at 5.0%, still very low by any standards.

One considerable disappointment in this survey, and perhaps a more important one as far as the pace of future fed hikes is concerned, is the wages figures. These grew at only a 2.5% year on year rise, and were flat over the month in December. Consensus had been looking for a modest 0.2% month on month increase, which would have taken wages into a range they had not inhabited since before the financial crisis. Instead, wages still seem to be struggling to rise. There was also no change in the average workweek, which tends to support the notion that wage pressures remain subdued, as increased hours frequently indicate a tight labour market and building wage pressures.

2.04pm GMT

Wages in the US were also on the rise, the figures show, but perhaps not enough for another interest rate hike at the Federal Reserve's next meeting.

The year on year gain was 2.5% in December compares to 2.3% in November, and is expected to pick up further as employment increases. However the average hourly earnings figure dropped a cent in December.

1.57pm GMT

The full US jobs report is here.

1.55pm GMT

Here are the charts showing the US job gains and unemployment rate:

1.40pm GMT

The jobs data may well have vindicated the Fed's rate decision, but there is no reason to be complacent, suggests Dennis de Jong, managing director at UFX.com. He said:

It's far too soon to know definitively if Fed Chair Janet Yellen and Co. made the right decision in raising interest rates last month. However, December's well above expected non-farm payroll figures will confirm her assessment that the world's biggest economy is in rude health.

Despite the positive jobs figures, there are plenty of challenges on the horizon for Yellen to navigate, not least depressed oil prices and the Chinese economy playing havoc with exchanges the world over. Observers will be hoping that next week's US retail sales figures show a bumper holiday trading period.

1.37pm GMT

The better than expected US jobs data could well prompt further rate rises this year, and this has pushed the dollar higher again.

Sterling has hit the day's low of $1.4556 , down from $1.4590 beforehand, while the euro has fallen around 1%.

1.32pm GMT

The jobless rate however has come in line with forecasts at 5%.

1.31pm GMT

November's jobs figure has been revised up from 211,000 to 252,000 and October's from 298,000 to 307,000.

1.30pm GMT

The non-farm payroll numbers for December showed a 292,000 rise compared to expectations of 200,000.

That seems to back up the Federal Reserve's decision to raise interest rates last month.

1.29pm GMT

Unless we added more than 500,000 new #jobs in December, 2015 will mark a slowdown in job growth from 2014.

1.27pm GMT

Our Financial editor, Nils Pratley, has kicked the tires on Sports Direct's profit warning.

His verdict - the City is changing its view of Mike Ashley's empire, fast. And can the weather really be blamed?

Should a mild winter really upset trading at a sportswear chain? Sports Direct is not in the coats and jumpers business in the way that Marks & Spencer and Next are. Warm temperatures, in theory, might even encourage better sales of trainers and tracksuits than freezing conditions.

Doesn't Sports Direct have a strong online business to capture the switch to online shopping? And surely the weather hasn't changed radically since management said four weeks ago it remained confident of achieving top-line profits of 420m in the current financial year; now it says anything between 380m and 420m is possible.

1.21pm GMT

After this turbulent week, many in the City and on Wall Street just hope the US jobs report will be undramatic:

Sighs of relief #NFPGuesses

1.15pm GMT

It's nearly time for the final major piece of economic data of the week -- the latest US jobs report for December.

Economists expect around 200,000 new jobs were created last month:

US #NFP Guesses SocGen, UBS 230k BarCap, BoA 225k GS, JP, MS 215k Citi, CS 210k Consensus 200k WF 195k Credit Ag 190k RBC 180k DBK 160k

12.47pm GMT

Wise heads in the City say that we shouldn't fixate on the exchange rate between the yuan and the US dollar.

Instead, we should look at how the yuan is shaping up against a basket of other currencies (who will also have suffered from the stronger dollar too)

But on a trade-weighted basis, China's currency is quite stable https://t.co/AApWyBsE0r via @markets pic.twitter.com/pz3FBgGFsJ

China would like to remind everyone that the yuan appreciated 1% last year*. *on a trade-weighted basis. https://t.co/hPmNFYp1hH

12.25pm GMT

Senior City economist Stephen Lewis has issued a long note on China today, explaining why there is such anxiety about China's financial stability, and the consequences for the global economy if things turn very sour.

I've cropped out some highlights below, as it provides some useful insight into the situation.

It should be no surprise that a rapidly growing industrial economy such as China's is drifting into choppy financial waters. The advanced economies faced similar challenges at corresponding stages in their development. But, in coping with the consequences of financial turbulence, the advanced economies often suffered significant losses of output relative to potential. The Beijing authorities are professedly seeking to change China's economic growth model from one which depends on exports and capital investment to one more firmly based on domestic consumption. But they may be over-estimating the extent to which politicians can choose how their economies grow. Since curbing growth in some sectors is usually easier than boosting it in others, the danger is that the attempt to re-orient the economy will result in overall weaker growth This is one reason, which seems to be widely acknowledged, why China's future growth could well fall short not only of recent rates but even of the Beijing authorities' more conservative projections for the years to come.

By 2050, those aged 65 or over could well stand at 38% of the labour force, slightly less favourable even than Japan's present ratio. There could be ameliorating circumstances for China. There may be scope for more migration from the countryside to urban centres without loss of agricultural production, though much less than there used to be. There will very likely be support to China's GDP growth from a shift in the urban workforce from low-productivity activities to higher-productivity occupations. Further, China would perhaps be less opposed on cultural grounds than Japan to immigrant labour, though there have been no moves in that direction yet. Indeed, the ruling Communist Party's highly developed sense of self-preservation might be expected to resist any disturbance of the status quo. At the same time, in the nearer term, China faces a unique problem, the result of the recent abandonment of the one-child policy in favour of a two-child policy. To the extent that this measure is effective in raising the birth rate, it will temporarily boost the dependency ratio, that is, the proportion that the non-working population, old and young, bears to those of working age. Those who are working will need to increase their output merely to meet the needs of a growing non-active population. There will likely be a reduced margin of savings to finance capital investment and thereby to support future growth.

The region is also a potential war-zone in a way that neither North America nor even Europe appears to be at the moment. Reports this week that North Korea has tested a hydrogen bomb is a reminder of the severity of the threat. Beyond the North Korean danger, both the East China Sea and the South China Sea are possible flashpoints. In the former area, there was a stand-off between Japan and China over the Senkaku (Diaoyu) islands through most of last year. But on 20 December an armed Chinese coast-guard vessel entered territorial waters that Japan claims around the islands. In response to these and other regional tensions, the Japanese government has proposed for the fiscal 2016/17 year a 1.5% increase in military spending to a highest-ever level. This is significant in view of the pressure to achieve reductions in other spending programmes. The Japanese government had been allowed, under the nation's post-war constitution, the right of self-defence, which would have covered operations around the Senkaku islands, but Mr Abe nevertheless pressed for, and in September secured, an amendment that would allow Japan to afford military help to allies. This strongly suggests that the Abe government foresees the possibility of Japan taking part in the resistance to what several nations in the region regard as Beijing's aggressive strategy in the South China Sea.

It seems a long time since the Spratly islands first hit the headlines. It was as long ago as 1999 that a Filipino naval ship deliberately ran aground on one of those islands to establish a claim to the archipelago. Last year, in a dramatic development, it became clear that China was determinedly seeking to enforce its own title to the area when it built an artificial island on the foundation of the Mischief Reef and went on to claim, in contravention of UN rules, territorial waters around that construction. The US Navy has since sought to enforce freedom of the seas by disregarding China's pretensions, thereby precipitating low-level exchanges with China's ships.

12.01pm GMT

There's drama in the City -- high street retailer Sports Direct has issued a profits warning.

The company admitted that it could miss its target of 420m profits by up to 40m, following weak sales since its last financial results on 10 December.

"a deterioration of trading conditions on the high street and a continuation of the unseasonal weather over the key Christmas period".

Sports Direct blaming unseasonable weather, but surely a mild autumn would encourage people to do more sports?

@GrahamtRuddick JD Sports issued a profit upgrade on Dec 3rd...

11.46am GMT

The European stock market rally is petering out. Germany's stock market is now in the red today:

DAX negative pic.twitter.com/0mCBtaqYxM

11.46am GMT

Now this is interesting.. China's centraal bank has issued a statement, pledging to "further liberalise" interest rates.

Reuters has more details:

The central bank also said it would make the yuan more international, keep the currency basically stable, further improve the currency formation mechanism and deepen reforms of the foreign exchange management system and financial institutions.

The central bank will use medium-term loans, and pledged supplementary loans and credit policies to support key areas of the economy.

11.07am GMT

If you're just tuning in, here's what you need to know....

A sense of calm has returned to global stock markets today, following the worst start to a new year on record. But China's economy remains a big fear, that could well dominate most of this year.

"Chinese investors want very similar things that international investors want: they want clarity, they want to understand what is going on, they want to know what the policies are, they want stability and [to know] what the rules are.

The constant back-and-forth and changes just don't engender confidence that Beijing has really any idea what they are doing."

A rebound in Chinese shares and the price of oil provided some relief for shares in Europe on Friday after a brutal first week of the year.

10.54am GMT

A handy reminder of how markets began 2016:

Stocks this week pic.twitter.com/csb9KkxI9n

10.45am GMT

When financial historians look back at this period, they will probably conclude that China's ill-fated and short-lived circuit breaker was not the best idea ever created.

It was meant to prevent mayhem, by briefly suspending trading when the market fell 5% and closing it off for the day if it lost another 2%.

RIP China circuit breakers: blog by @PatrickMcGee_ with image that has gone viral in China https://t.co/8GddfgWVsk pic.twitter.com/dkBOOctVaO

Human psychology has had a strong hand to play in the way Chinese markets have behaved. The removal of the system that suspends the market should it fall too much has, ironically, seen the fear of entrapment reduced with Asian investors.

10.07am GMT

Britain could lose almost 1% of global economic output if China's economy suffers a serious hard landing, according to analysis from Oxford Economics.

And that would actually mean the UK gets off relatively lightly, compared to the pain which emerging markets would suffer.

Our estimates of GDP impact of China hard landing (1) advanced economies pic.twitter.com/VZ0cttuD7k

Our estimates of GDP impact of China hard landing (2) EM pic.twitter.com/wTaQiRLigq

9.55am GMT

Over in Hong Kong, investors are catching their breath after the worst new year week since 2000.

The Hang Seng index closed higher today, up 0.6%. But heavy losses earlier this week mean it lost 6.6% so far this year.

9.53am GMT

Dr Nikos Paltalidis, lecturer in Finance at Durham University Business School, also reckons fears over China's stock market are overblown.

He points out that shares did soar by 50% last year - a clear sign of a speculative bubble that is now deflating. However, that doesn't mean that the selloff won't cause serious consequences.

"The sudden wave of concern about China's looming economic catastrophe is overblown.

However, the burst of the stock market bubble, increases the concern about the knock on effect on the real-estate market. Chinese policymakers might need to respond with additional currency devaluation, and if things get worse, some form of quantitative easing, to avoid a collapse in asset prices.

9.42am GMT

Despite today's small recovery, European stock markets are on track for their worst week since last August's rout (which was also triggered by China).

Richard Hunter, Head of Equities at Hargreaves Lansdown Stockbrokers, says investors have adopted "the brace position" this week:, wiping around 5% off the major indices.

What should have been a perky start to 2016, with New Year optimism underpinned by portfolio positioning as investors buy stocks, has been eclipsed by ongoing concerns on global growth, the oil price and negative geopolitical developments.

The general souring of sentiment had been exacerbated by the Chinese circuit breakers, along with Fed minutes which questioned the strength of belief in the December hike and sellers apparently pushing against an open door."

9.22am GMT

One of Angela Merkel's top allies has called for calm over China.

I do believe that China is getting back on track. It is still tracking a 7% growth rate - 7% growth is a decent number....

I'm not so pessimistic that China is going to be in a deep crisis.

9.15am GMT

There's a sense of relief in the foreign exchange markets this morning, as emerging market currencies recover.

Ilya Spivak, currency strategist at DailyFX, has the details:

Investors' mood brightened after two days of aggressive selling after China suspended circuit-breakers that shut off stock market trade after just 14 minutes of activity yesterday and set the daily Yuan fix a bit higher.

The risk-geared Australian, Canadian and New Zealand Dollars outperformed while the safety-linked Japanese Yen proved weakest on the session.

8.56am GMT

In a few weeks Beijing will have a window of opportunity to take fresh steps to shore up its economy:

A month until Chinese New Year; markets take a break over the celebrations so it's a perfect time for fiscal and mon pol action

8.37am GMT

After 30 minutes of trading, European markets are all showing small gains:

8.37am GMT

This week's ructions have not improved Beijing's reputation for economic competence.

As Marc Ostwald of ADM Investor Services puts it:

As we have argued before, China's authorities have clearly bitten far more than they can chew in their markets and economy reform efforts, with a clear sense that they are at best fumbling in the dark emerging.

8.25am GMT

The oil price is rising this morning, in another signal that markets are a little calmer this morning.

Brent crude has gained 1.5% to $34.26 per barrel, having hit fresh 11-year lows yesterday.

8.16am GMT

Mining stocks are recovering some ground, with commodity trader Glencore up 2.3% and Rio Tinto up 1.5%.

Again, a small move - as Accendo Markets' Mike van Dulken points out:

Miners bouncing but hardly convincing of recovery. And anyway, what's changed fundamentally?

8.12am GMT

Europe's stock markets are open, and showing some small gains in early trading.

The FTSE 100 has risen by 20 points, or 0.3%, to 5974, while Germany's DAX is 0.4% higher.

8.07am GMT

How much market value has been destroyed in this week's stock market rout?

According to CNBC's Jacob Pramuk, we have lost.....(puts on Dr Evil voice) two trillion dollars!

The S&P Global Broad Market Index, which tracks global stock performance, has lost $2.23 trillion in market value this year. For perspective, the total trumps estimated U.S. student loan debt of more than $1 trillion and would represent roughly 12 percent of U.S. government debt.

Global stock index has lost $2 TRILLION this year https://t.co/yeRLDioUxQ pic.twitter.com/8IWqGtPAVl

And there goes $4T...wiped off Bloomberg World Exchange Market Cap. That's more than Germany's annual GDP! #stocks pic.twitter.com/0XHEOB78O3

7.58am GMT

The Financial Times also flags up that Beijing authorities appears to be buying shares today:

By lunch time the indices were up, amid reports that China's state-backed funds were once again buying up shares

On Thursday the securities regulator said that its promulgation of permanent rules restricting stock sales by large shareholders did not indicate that the "national team" is withdrawing from the market.

7.28am GMT

Good morning from London, where City traders are arriving at their desks and looking nervously at developments in Asia overnight.

#China's CSI300 closes up 2% at 3,361.56 points after volatile session. Down 9.9% for the week, worst since Aug2015. pic.twitter.com/55P4lsXBYK

7.08am GMT

It's time for me to sign off from Sydney and pass you over seamlessly to Graeme Wearden in London for what should be an interesting day.

Thanks for following us.

6.46am GMT

While not a great start to the year for the Japanese market.

6.45am GMT

This is how the European opening looks. Still a bit of a mixed bag.

6.40am GMT

Associated Press has just put together a thought-provoking three reasons for concern about the Chinese economy.

6.24am GMT

Japan has just closed down at an estimated cost this week of $320bn in market capitalisation. Ouch.

6.15am GMT

For a full story on the day's developments so far, my colleague Tom Phillips has just filed this report from Beijing:

5.52am GMT

In another snippet from Tom's report, there are rumours that the head of the Chinese regulator, Xiao Gan, will be resigning tomorrow.

IG analyst Angus Nicholson said in a note today that:

Confidence in China's ability to manage their capital markets has only been further damaged after they announced the removal of their "circuit breakers" after only being in place for four days (sending the market limit down 50% of the time) and rumours circulating that CSRC head Xiao Gang would be resigning tomorrow.

5.39am GMT

In broader economic news, a strong jobs figure is expected from the US later today.

The magnificently named non-farm payrolls are due on Friday lunchtime US time and are expected to show that employers likely maintained a fairly strong pace of hiring in December.

5.32am GMT

Back to the Beijing competence theme with the Wall Street Journal weighing in...

5.27am GMT

The ASX/S&P 200 index has closed below 5000 points after a sixth straight session in the red.
The benchmark was 19.5 points, or 0.39%, lower at 4,990.8, while the broader All Ordinaries index was down 19.4 points, or 0.38 per cent, at 5,049.4, Australian Associated Press reports.

5.25am GMT

My colleague in Beijing, Tom Phillips, says China has mustered the "national team" to fight to avoid the kind of stock market turmoil that left president Xi Jinping embarrassed last year.

Chinese investors want very similar things that international investors want: they want clarity, they want to understand what is going on, they want to know what the policies are, they want stability and [to know] what the rules are.

The constant back-and-forth and changes just don't engender confidence that Beijing has really any idea what they are doing.

5.02am GMT

And here's a European view:

5.01am GMT

A couple of hours to go before trading opens in Europe and it's a mixed picture about what is going to happen there.

According to IG, the FTSE 100 will open up 13 points while the Dax in Geramy looks likely to open down 19 points.

4.47am GMT

Some straighter business news out of China today shows that demand for electric cars is growing.

Despite a slowing economy and volatile financial markets, Chinese automakers such as BYD and Geely Automobile Holdings have flagged bumper profits for 2015, boosted by favourable government policies and consumer preferences that stoked demand for their products.

BYD said late on Thursday it expects net profit attributable to shareholders to climb between 518% and 557% for 2015, compared with an earlier forecast of a rise in the range of 435% to 481%.

4.32am GMT

Nerves do seem to have been settled by the PBOC's yuan intervention/fix policy. The steps today to fix the yuan firmer and then get state-owned banks to prop up the offshore yuan value look contradictory in the light of previous days' actions.

But in the absence of the circuit breaker it's done the trick for now. The CSI300 and Shanghai Comp have paused for lunch up 2.75% and 2.39% respectively. The Nikkei is up a smidgeon but the ASX is still trailing at 0.53% down

4.13am GMT

It's a good day for charts.

4.09am GMT

Expert opinion is quite divided about the state of play in China.

Tian Weidong, analyst at Kaiyuan Securities in Shanghai put what might be described as the party line:

The market is back to normal Investors can buy and sell as they wish. Under the circuit breaker mechanism, the market was suffocated.

They realised this, which is good news. The bad news is they took it off at a very peculiar time and did so without a whole set of compensating measures.

3.47am GMT

The mainland Chinese markets are coming up for their lunch break, so it's a good time to check on the scoreboard.

Asia Pacific markets are all up, except Australia.

3.31am GMT

Oil may have rallied a bit but it's still a poor outlook for prices of other industrial commodities.

London Copper has dropped 1% to $4,480 a tonne this afternoon, nearing 2009 lows. Nickel fell 2%, while lead and zinc eased nearly 1%.

3.19am GMT

The Japanese finance minister Taro Aso has warned that the Chinese might find it hard to continue supporting the yuan given the decline in its foreign currency reserves revealed on Thursday.

Foreign exchange reserves have already fallen this much due to China's purchases of yuan to support its own currency, so it could be difficult to continue.

3.04am GMT

Reuters quotes a trader at a European bank in Shanghai that state-owned banks were offering dollar liquidity at 6.59 yuan per dollar in an attempt to push it higher.

But it's confused picture, not helped by the difference in the onshore and offshore value of the yuan.

The onshore yuan recovered to 6.5887 in morning trade, while the offshore yuan was about 1.4 percent weaker at 6.6798, narrowing a spread that reached around 2 percent a day earlier, making the central bank's currency management task more complicated.

After its sharply lower fix on Thursday, the PBOC had later sown confusion by reportedly intervening heavily to defend the yuan in offshore trade, reversing a decline of more than 1 percent that took it to a record low of 6.7600 per dollar.

2.42am GMT

The Chinese central bank, the PBOC, is intervening to support the yuan, according to Reuters.

2.37am GMT

The global oil benchmark, Brent crude, has rallied 2% today after China boosted the yuan.

Brent had risen 56 cents to $34.31 a barrel as of 12.50 AEDT (0150 GMT), having hit $34.72 earlier. It settled down 48 cents at $33.75 in the previous session, after marking $32.16, a level last seen in April 2004.

2.32am GMT

It's not easy to keep track this morning but here are the main points.

2.18am GMT

It should be said at this point that the volatility of the Chinese markets is much more significant for what it tells us about policy-making in Beijing than the intrinsic importance of the numbers. Most people accept that the share prices in China are totally overvalued and must be allowed to fall. But it's the disorderly manner in which this is happening which makes it interesting.

1.59am GMT

Are you keeping up at the back?

It's a confused picture today and no mistake. The chart in this tweet is quite helpful though. Thanks to Patrick McGee of the FT.

1.56am GMT

Traders were following China's lead upwards. But the Chinese markets are all over the place. After an early rally, the Shanghai Composite index and the CSI300 index of leading shares are heading south again.

How low will they go?

1.46am GMT

Decent Australian retail sales for November helped boost the ASX.

They were up 0.4% boosted by a 1% rise in the cafes and restaurants category, yet proof if any were needed that Australians just love to eat out. Household goods sales increased by 0.9%.

1.37am GMT

Stock markets have rallied across Asia Pacific.

The Nikkei is down just 0.24%, while the ASX/S&P 200 in Australia is now into positive territory.

1.35am GMT

It's the first time the PBOC has fixed the yuan stronger in nine days. A lower number equals a stronger fix because it relates to what it takes to buy one US dollar.

The People's Bank of China set the midpoint rate at 6.5636 per dollar prior to market open, firmer than the previous fix of 6.5646, and firmer than the previous day's closing quote 6.5929.

That is the first time the PBOC has firmed the midpoint against the dollar in 9 trading days, after it allowed the biggest fall in the yuan in five months on Thursday, pressuring regional currencies and sending global stock markets tumbling as investors feared it would trigger competitive devaluations.

1.27am GMT

The Australian dollar is an immediate beneficiary of this stronger yuan fix.

The Aussie has gained almost half a cent in the last 10 minutes and is now buying US70.60c.

1.24am GMT

The yuan fix is a good deal more stabilising than previous ones this week.

Last night's close was 6.5929 to the US dollar which means the PBOC has opted for a more confidence-boosting currency level for now.

1.20am GMT

Yuan fixed at 6.5636

1.17am GMT

Only a few minutes before the People's Bank of China announces today's fix for the yuan. A weaker than expected fix has twice triggered market crashes this week so this is going to be a key moment.

Yesterday China published figures for foreign reserves which showed it was burning through cash to prop up the yuan. So will they stick or twist today?

1.10am GMT

Good morning and welcome to the live blog. It's been another lively morning on the financial markets and it's tense ahead of the opening of the Chinese mainland markets at 12.30 AEDT.

The Chinese regulator has scrapped its controversial "circuit-breaker" mechanism which has been triggered twice this week when losses hit 7%, forcing the markets to cease trading.

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