The worst thing about a holiday is getting back to work. Having missed the market fireworks last week, China returned to business on Monday and the CSI 300 index dropped 4.3 per cent.

Not even a weekend easing by the central bank could halt China’s equity market  from playing catch-up after an index of mainland companies listed in Hong Kong was punished last week. The People’s Bank of China cut its reserve ratio by 1 percentage point, the fourth such move this year. The move will allow domestic banks the freedom to repay a term lending facility due on October 15, and also lend more cash to a slowing economy, thereby helping offset the hit from rising Sino-US trade tension.

As Chinese shares wilted on Monday, the renminbi also dropped 0.8 per cent to Rmb6.926 a dollar, in what Marc Chandler at Bannockburn Global Forex calls “an unusually large decline for the closely managed currency”. Tougher trade action from the US, part of what Beijing on Monday described as  “misguided actions”, does raise the prospect of a weaker Rmb and/or fiscal stimulus as China seeks to bolster the economy. Further weakness in the currency beyond Rmb7 to the dollar will hardly soothe the fraught situation with the current US administration, but this is a weapon that China can deploy and one to carefully watch out for.