European markets are set for a higher open on Wednesday, after China’s central bank set its currency slightly weaker than expected amid an ongoing escalation of its trade war with the U.S.
The FTSE 100 is seen around 10 points higher at 7,182, the DAX is expected to open around 50 points higher at 11,618, and the CAC 40 is expected to open around 15 points higher at 5,250, according to IG data.
The People’s Bank of China set the official midpoint reference for the yuan at 6.9996 on Wednesday, slightly weaker than expected, two days after Washington labeled Beijing a currency manipulator. The U.S. objects to the lower yuan as it makes Chinese exports cheaper on international markets, offering Chinese products a price advantage.
Asian stocks were subdued in Wednesday afternoon trade as investors are closely watching the 7 yuan per dollar level, a psychological barrier breached on Monday for the first time since 2008, according to Reuters. China allows the yuan to trade within a narrow band of 2% from each day’s midpoint.
Global markets have been on a losing streak since U.S. President Donald Trump announced a 10% tariff on a further $300 billion worth of Chinese imports last Thursday.
Back in Europe, major banking earnings are in focus Wednesday, after German lender Commerzbank posted a net second-quarter profit of 271 million euros ($303.79 million) which was little changed from the same period a year ago, but exceeded the 217 million euros expected by analysts.
Italy’s Unicredit posted a sharp rise in second-quarter net profit of 1.85 billion euros, a sharp rise from the 1.02 billion euros posted a year ago, boosted by the sale of its stake in FinecoBank, but coming in below analyst expectations.