Global stocks buoyed by China stim­u­lus

The Pak Banker - - MARKETS/SPORTS -

Global stocks ral­lied with US equity fu­tures, emerg­ing-mar­ket cur­ren­cies rose and crude oil climbed to an eight-week high as mon­e­tary stim­u­lus in China bright­ened prospects for the world's se­cond-largest econ­omy.

Bench­mark share in­dexes ad­vanced across Asia af­ter the Peo­ple's Bank of China cut lenders' re­serve re­quire­ments, free­ing up funds to help spur lend­ing. Rus­sia's ru­ble and South Africa's rand led gains among ma­jor cur­ren­cies, while China's yuan rose for the first time in eight days. Nickel and tin led gains in in­dus­trial me­tals prices as Ger­many's bonds de­clined. Ja­pan sold 10-year debt at a neg­a­tive yield for the first time. While Fe­bru­ary marked a fourth con­sec­u­tive monthly de­cline in global stocks, a bench­mark eq­ui­ties in­dex ral­lied more than 5 per­cent since Feb. 11. Mount­ing signs that Amer­i­can con­sumers can still power the world's largest econ­omy and hints from cen­tral banks in Asia and Europe that more stim­u­lus is at the ready un­der­pinned the re­vival, along with re­bounds in crude oil and the yuan.

"Mar­ket sen­ti­ment is on its way to­ward a re­cov­ery, but the slight­est bad news can still rock it," said Toshi­hiko Mat­suno, chief strate­gist at SMBC Friend Se­cu­ri­ties Co. in Tokyo.

The cut in Chi­nese lenders' re­serve re­quire­ments was the first in four months and comes af­ter the econ­omy ex­panded last year at the slow­est pace in a quar­ter cen­tury. The na­tion's par­lia­ment will gather on Satur­day for an an­nual meet­ing, where plans for 2016 and the next five years will be out­lined. The Stoxx Europe 600 In­dex gained 0.3 per­cent as of 8:25 a.m. Lon­don time. Bar­clays Plc slid 5.7 per­cent in Lon­don af­ter the bank said fourth-quar­ter profit fell by more than half and an­nounced plans to sell down a 62 per­cent stake in its Africa busi­ness -- news that led to Bar­clays Africa Group Ltd. fall­ing as much as 5 per­cent in Jo­han­nes­burg. Glen­core Plc de­clined 1.1 per­cent af­ter the com­modi­ties com­pany re­ported a 69 per­cent slump in an­nual profit. The MSCI Asia Pa­cific In­dex rose 0.8 per­cent headed for its big­gest gain in a week. In­dia's S&P BSE Sen­sex jumped 2.8 per­cent, ral­ly­ing af­ter the govern­ment an­nounced its bud­get on Mon­day. Hong Kong's Hang Seng In­dex added 1.6 per­cent and the Shang­hai Com­pos­ite In­dex gained 1.7 per­cent, trim­ming its loss for the year to 23 per­cent.

China's $5.3 tril­lion stock mar­ket will re­bound as much as 20 per­cent in the "short term" as eco­nomic growth picks up and yuan volatil­ity de­creases, ac­cord­ing to Lirong Xu, chief in­vest­ment of­fi­cer at Franklin Tem­ple­ton's money-man­age­ment unit in Shang­hai. That view was echoed by Gao Ting, head of China strat­egy at UBS Se­cu­ri­ties Co. in Shang­hai, who said sen­ti­ment is "overly pes­simistic" and there's a grow­ing chance of a rally within the next three months as the cen­tral bank loosens mon­e­tary pol­icy.

Stan­dard & Poor's 500 In­dex fu­tures rose 0.4 per­cent, re­vers­ing ear­lier de­clines.

The yuan strength­ened 0.2 per­cent ver­sus the dol­lar as the Peo­ple's Bank of China raised its daily ref­er­ence rate for the first time in a week. The cur­rency strength­ened 0.3 per­cent in Fe­bru­ary, af­ter losses of 1.3 per­cent or more in each of the pre­vi­ous three months.

"With a stronger fix­ing, they're try­ing to en­sure a sta­ble yuan even as they ease pol­icy through the re­serve-re­quire­ment-ra­tio chan­nel," said Khoon Goh, a for­eign-ex­change strate­gist at Aus­tralia & New Zealand Bank­ing Group Ltd. in Sin­ga­pore.

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