Wall Street set for lower open af­ter China’s rate hike

The Pak Banker - - I Nternational -

NEW YORK: Wall Street was set for a lower open on Mon­day as shares fell glob­ally fol­low­ing a sur­prise in­ter­est rate in­crease from China's cen­tral bank.

China's cen­tral bank raised in­ter­est rates on Satur­day for the sec­ond time in just over two months as it stepped up its bat­tle to rein in stub­bornly high in­fla­tion. The Peo­ple's Bank of China said it will raise the bench­mark lend­ing rate by 25 ba­sis points to 5.81 per­cent and lift the bench­mark de­posit rate by 25 ba­sis points to 2.75 per­cent.

Trad­ing vol­umes, al­ready light for the hol­i­day sea­son, are ex­pected to be even lighter as a bliz­zard moved across the northeastern United States on Mon­day, dis­rupt­ing air and rail travel and forc­ing mo­torists to deal with blow­ing snow and icy roads af­ter the busy Christ­mas week­end.

"Vol­ume usu­ally picks up a bit af­ter a long week­end but that is not go­ing to be the case to­day with the snow storm... no­body can get into their of­fices in the North­east and ba­si­cally there is re­ally lack of any­thing go­ing on on Wall Street," said Fred Dick­son, chief mar­ket strate­gist at D.A. Davidson & Co in Lake Oswego, Ore­gon.

S&P 500 fu­tures fell 5.4 points and were be­low fair value, a for­mula that eval­u­ates pric­ing by tak­ing into ac­count in­ter­est rates, div­i­dends and time to ex­pi­ra­tion on the con­tract. Dow Jones in­dus­trial av­er­age fu­tures fell 40 points, and Nas­daq 100 fu­tures dipped 7.5 points.

De­spite the bliz­zard, the New York Stock Ex­change was in nor­mal op­er­a­tion.

"Ev­ery­thing is busi­ness as usual," an NYSE spokes­woman said. In Europe, stocks were down about one per­cent (.FTEU3) with thin vol­umes as UK mar­kets re­mained closed, and as China's lat­est rate hike prompted in­vestors to cash in a lit­tle por­tion of the strong gains made in De­cem­ber. -Reuters

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