Grim China data keeps stim­u­lus hopes alive

The Pak Banker - - COMPANIES/BOSS -

LON­DON: A deep­en­ing slow­down in de­mand in China took cen­ter-stage on Mon­day, boost­ing some stock mar­kets on hopes of more pol­icy stim­u­lus even as it knocked com­mod­ity prices. China's stock mar­kets bucked broad cau­tious­ness in Asian eq­ui­ties with ma­jor in­dices up be­tween 2 and 4 per­cent, while Euro­pean trad­ing got off to a sub­dued start as min­ing and energy stocks pulled the pan-Euro­pean FTSEurofirst 300 eq­uity in­dex .FTEU3 down 0.2 per­cent.

Chi­nese pro­ducer prices in July hit their low­est point since late 2009 and ex­ports tum­bled 8.3 per­cent in the same month, stok­ing ex­pec­ta­tions of more ac­tion from the cen­tral bank af­ter months of in­ter­ven­tion by the author­i­ties to tame China's un­ruly stock mar­ket. "Ex­pec­ta­tions of fur­ther eas­ing are build­ing and an­nounce­ments of lib­er­al­iza­tion have boosted the eq­uity mar­ket," said Kit Juckes, se­nior FX strate­gist at So­ci­ete Gen­erale in Lon­don.

The out­look in China con­trasted with solid U.S. data on Fri­day that ap­peared to keep ex­pec­ta­tions on track for an in­ter­est rate rise as early as Septem­ber. The dol­lar stayed close to a nearly four-month high against a bas­ket of cur­ren­cies on Mon­day, while 10-year Ger­man and U.S. Trea­sury yields were one ba­sis point higher. "The dis­lo­ca­tion from a strong dol­lar, ris­ing long rates and fall­ing oil prices is still be­ing fac­tored into share prices in our view," said Sean Darby, strate­gist at Jef­feries.

The MSCI All-Coun­try World in­dex .MIWD00000PUS was flat, while emerg­ing-mar­ket eq­ui­ties were up 0.1 per­cent. There was also some op­ti­mism over Greece, where of­fi­cial com­ments pointed to a speedy wrap-up of bailout talks de­signed to save the coun­try from fi­nan­cial ruin. Com­mod­ity prices took a hit: Lon­don cop­per traded at six-year lows and crude oil fu­tures touched fresh multi-month lows. Lon­don­listed min­ing shares like BHP Bil­li­ton (BLT.L) and An­glo Amer­i­can (AAL.L) fell more than 2 per­cent. The Malaysian ring­git plumbed lows last seen dur­ing the Asian fi­nan­cial cri­sis 17 years ago, af­ter a fall in for­eign ex­change re­serves raised doubts over the cur­rency's abil­ity to with­stand pres­sure from po­lit­i­cal un­cer­tainty and slower growth.

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