China-Related ETFs Take A Hit In Tuesday's Premarket Despite Global Markets Showing Signs Of Recovery: What's Going On?

Author: Benzinga Neuro | August 06, 2024 07:53am

In the wake of China stocks plummeting to a six-month low, China-related ETFs in the U.S. saw a decline in pre-market trading on Tuesday.

What Happened: Despite an overall regional relief rally, China stocks suffered a blow on Tuesday, causing the yuan to ease from Monday’s seven-month high against the dollar, Reuters reported. This shift challenges the view of Chinese assets as a haven amid global market turmoil.

ETFs such as KraneShares CSI China Internet ETF (NYSE:KWEB) and iShares MSCI China ETF (NASDAQ:MCHI) saw a decrease of 0.27% and 0.81% respectively in trading. The iShares China Large-Cap ETF (NYSE:FXI) also experienced a 1.16% decline.

China’s long-term yields surged due to concerns of government-led bond selling to cool down a heated rally, rather than a positive economic outlook. The blue-chip CSI 300 Index ended the session flat, hitting its lowest since February. The Shanghai Composite Index closed up 0.2%, while Hong Kong’s Hang Seng closed down 0.3%.

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Why It Matters: On Monday, U.S. stock markets closed significantly lower, with the Nasdaq and S&P 500 each falling over 3%. This was a continuation of the previous week’s sell-off, driven by fears of weak economic data and a soft U.S. payrolls report.

However, the U.S. stocks look to bounce back on Tuesday. In premarket trading on Tuesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) gained 0.78% to $521.40, and the Invesco QQQ ETF (NASDAQ:QQQ) rose 0.82% to $438.95, according to Benzinga Pro data. The Japanese market, which was the epicenter of Monday's sell-off, rebounded strongly, with the Nikkei 225 average climbing over 10%. The Taiwanese and South Korean markets also rose notably.

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Image via Shutterstock

This story was generated using Benzinga Neuro and edited by Pooja Rajkumari

Posted In: FXI KWEB MCHI QQQ SPY