Global markets hit pause after Wall Street’s trade-driven rout

BEIJING — Global markets steadied Tuesday after Monday’s dramatic rout, amid signs that China will not immediately act on its veiled threat to use the value of its currency as a weapon in its trade war with the United States.

Asian markets ended broadly lower, but European markets were mixed at the opening. Futures markets indicated Wall Street would open only modestly lower.

Tuesday’s calmer sentiment stood in sharp relief to Monday, when the threat of a worsening trade war between the United States and China led to a global sell-off. Wall Street suffered its worst day of the year and investors around the world sought to put their money in places generally considered safe.

Asian stocks began Tuesday with another steep drop, set off by lingering fears that China might decide to devalue its currency as a way to retaliate against President Donald Trump’s threat of higher tariffs on Chinese-made goods. But later in the morning, China’s central bank indicated that it was not ready to weaponize the Chinese currency just yet, leading Asian markets to recover some of their losses.

The People’s Bank of China, the central bank, set its daily fixing for the yuan — basically, an anchor around which Beijing allows investors to drive the currency weaker or stronger within a fixed ranged — at a stronger level than many analysts expected. The central bank also said it would sell yuan-denominated bills in Hong Kong, a move that generally puts downward pressure on the currency. The yuan, which weakened more than 1% Monday, strengthened modestly during the Asian trading day.

The Chinese central bank continued to defend its handling of the currency. On Tuesday, it cited the pressure the yuan has faced to depreciate by investors, who have been motivated by China’s slowing economic growth and rising pressure from the trade war with the United States.

The exchange rate “is determined by market supply and demand, and there is no problem of ‘currency manipulation,’” the bank said in a statement.

Trump on Monday declared China to be a currency manipulator, a largely symbolic move that nevertheless drew objections from Beijing. The Chinese central bank on Tuesday called the move “wayward unilateralism and protectionist behavior that seriously undermines international rules and will have a major impact on global economic finance.”

The Chinese state news media continued to strike a strident tone Tuesday.

“China hopes to reach a trade agreement with the U.S.,” said an editorial Tuesday in The Global Times, a tabloid controlled by the ruling Communist Party, but it added that “every time Washington raises tariffs as a weapon, China will rise up and take countermeasures.”

Despite Tuesday’s deep breath by investors, the prospect of further devaluations by China could continue to unnerve markets. Should China allow the yuan to depreciate in the weeks and months ahead, other countries could face pressure to devalue their own currencies, which would further endanger global growth prospects. It could also make it much harder for Washington and Beijing to strike a trade deal.

“Unless negotiations between the U.S. and China resume rapidly, this latest development is likely to create negative spillover effects in both China, the U.S. and globally, and particularly in Asia,” said Martin Petch, vice president of the Sovereign Risk Group at Moody’s Investors Service, the ratings firm, in a note to clients.

Stocks in China outpaced losses in most Asian markets. The Shanghai Composite Index fell 1.6%.

Both the Nikkei 225 index in Japan and the Hang Seng Index in Hong Kong ended down 0.7%.

South Korea’s Kospi index fell 1.5%, while in Taiwan the Taiex index fell 0.3%.

In London, the FTSE 100 index opened 0.6% lower. But France’s CAC 40 index rose 0.2%. Germany’s DAX was flat.