China's yuan and stock markets rallied modestly on Friday after fiercely selling off, but investors struggled with some of their worst losses in years when a fierce Sino-US chain threatened to ruin the market World's Second Largest Economy
The yuan has been set at record highs for its largest monthly decline. Chinese stocks, which have been in a downward spiral since the end of January, also faced their largest monthly downward move since January 2016.
The downturn showed investor concern as Washington and Beijing showed no sign of withdrawing their collective bargaining dispute] Concern is that an extensive sell-off of the stock and the yuan could trigger a spike in capital outflows, adding to the burden on the economy and complicating policy making as the authorities close the trade battle with the United States.
3 percent decline per month
The yuan lost more than 3 percent of its value against the dollar in June, the largest drop since the market price was unified in 1
Offshore, where the Yuan trades more freely, the unit rose by about a quarter, at 6.6224 per dollar.
Stocks rebounded more than 2 percent on the benchmark index CSI300, while the Shanghai Composite Index gained around 2 percent despite falling by around 9 percent for the month. In Hong Kong, the benchmark Hang Seng Index also rose more than 1 percent.
Trump and trade
President Donald Trump has shaken the world trade order by trying to renegotiate the terms of some of the US trade relations, particularly with China.
The US seeks to impose $ 34 billion in tariffs. and has threatened tens of billions of dollars more for similar tasks.
Chinese 10-year Treasury futures for delivery in September, the most-traded contract, jumped 0.34 percent. A fixed income portfolio manager said the sharp rise was the result of promises of central banks 'abundant' liquidity.
"The central bank is expected to step up its efforts to calm investors and slow down the devaluation of the yuan. Aversion to regional markets, including a possible reintroduction of the countercyclical factor," wrote Gao Qi, FX strategist at the Scotiabank in Singapore, on Friday.
He expects "strong resistance" at 6.70 yuan per dollar  Hard hit areas
Sectors and stocks exposed to the devaluating yuan were hit hard this month.
Real estate fell 5.7 percent and is down for the fifth year in a row. The transport sector index, which includes many leading airlines, fell 9.4 percent this month, posting the largest monthly decline since January 2016.
A Shanghai regional bank trader who did not want to be nominated said there was some "fixation" on the central fix that is set by the central bank every morning so as not to drop the yuan too much.
"It's too early to say if the anti-cyclical factor has been revived – if the market sentiment could recover by itself, it's not necessary to use the factor – the market needs some more time to digest "said the dealer.