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Market Movements:

• The Shanghai Composite declined by 0.55% to close at 3,120, and the Shenzhen Component lost 0.61% to reach 10,418 on Thursday.
• The retreat followed a three-day streak of gains as investors responded to the latest Chinese Purchasing Managers’ Index (PMI) figures.

PMI Figures and Economic Data:

• Official data indicated that Chinese manufacturing activity contracted for the fifth consecutive month in August.
• However, the reading of 49.4 was better than both last month’s 49.3 and the consensus forecast.
• Services activity, although expansionary, posted its lowest reading in eight months.
• A private survey showed a rebound in Chinese consumer spending for August, while the property sector continued to deteriorate.

Market Impact:

• Notable losses were observed among heavyweight firms, including ChongQing Changan (-6.1%), East Money Information (-2.2%), Jinke Property (-4.9%), 37 Interactive (-7.5%), and Wuliangye Yibin (-1.2%).

Yuan and Economic Factors:

• The offshore yuan steadied near 7.3 per dollar, but was still on track to lose over 2% in August.
• Economic uncertainties in China and multiple interest rate cuts from the central bank contributed to the yuan’s performance.

Central Bank Interventions:

• Chinese authorities implemented measures to enhance capital markets and bolster investor confidence.
• These measures included halving the stamp duty on stock trading and other initiatives.

6 Days Ago

Policy Moves:

• Earlier in August, the People’s Bank of China reduced several benchmark lending rates to support the economy.
• The central bank unexpectedly maintained the five-year loan prime rate at 4.2% while lowering the one-year loan prime rate to a record low of 3.45%.
• These actions aimed to address economic challenges and stimulate growth.

Government Bond Yield and Outlook:

• China’s 10-year government bond yield increased to around 2.6%, rebounding from a three-year low seen earlier in August.
• This shift reflected investors’ reassessment of China’s economic and policy outlooks.

The Chinese Yuan’s technical outlook appears balanced, reflecting minimal changes compared to the prior session. Traders appear to rely on the market extremes to anticipate potential rotational patterns. Meanwhile, the slightly stronger dollar index could offer support for the greenback in the near term.

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