Asian markets move higher and yuan strengthens

China's yuan also strengthened after the country's central bank fixed the currency at a rate that was stronger than what analysts anticipated.

Japan's Nikkei rose 0.6%, while South Korea's Kospi (KOSPI) climbed 1%. Hong Kong's Hang Seng Index (HSI) added 0.3%. And China's Shanghai Composite Index (SHCOMP) gained 0.6%, poised to snap a six-day losing streak. Taiwan's Taiex rose 0.8%.

It's been a turbulent week for markets, as fears about the US-China trade war and the risk of a recession have gripped investors. Trading in the United States on Wednesday was volatile.

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Thursday's upswing in Asia came a day after central banks in India, New Zealand and Thailand all made aggressive cuts to interest rates. The Philippines is expected to follow suit, said Ken Wong, an Asian equity portfolio specialist for Eastspring Investments.

Wong added that expectations have risen for the Federal Reserve in the United States to make additional cuts, too, to bolster growth amid rising fears about a worldwide economic slowdown. The Fed cut rates last month for the first time since the Great Recession.

Meanwhile, China's yuan rose in both onshore and offshore trading. The People's Bank of China earlier cut the yuan's daily reference rate to 7.0039 yuan to one US dollar. China sets a "band" every day to limit how far up or down the yuan's value can move.

While that is the lowest fixing the central bank has made since the spring of 2008 — and below the psychologically important benchmark of 7 — it wasn't as weak as what was expected, according to analysts polled by Reuters.

China's daily reference rate for the yuan has been of immense interest to investors since the country let its currency fall below 7 to the US dollar in trading earlier this week. That devaluation sparked a worldwide sell-off Monday, and prompted the United States to label China as a "currency manipulator." But China has also taken steps this week to shore up its currency.

While Thursday's fix was stronger than expected, it is still ambiguous enough to keep the market guessing, said Stephen Innes, managing partner for Valour Markets Pte in Singapore.

And while the Chinese central bank "continues to deny they will weaponize the yuan they have a sturdy tool at their disposal and will not hesitate" to use it to offset tariffs, he added. US President Donald Trump escalated the trade war last week by threatening a new round of tariffs on China.

Wong, the analyst from Eastspring Investments, said the fact that China set its fix for the yuan below 7 was "more of a news headline and market noise, and doesn't have material impact."

"The depreciation of the yuan so far is limited compared with other emerging markets currencies in the region," he said. "I seriously doubt the yuan will have a large depreciation against the dollar, as it will trigger massive capital outflows, which is something that China absolutely doesn't want."

CNN Business' Anneken Tappe contributed to this report.

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