Global slowdown

03 Feb, 2020 - 16:02 0 Views
Global slowdown

eBusiness Weekly

In a bid to soften the blow on China’s economy, the country’s central bank cut reverse repo rates by 10 basis points and injected 1.2 trillion yuan ($173.8 billion) of liquidity into the markets on Monday.

Beijing also said it would help companies that produce vital goods resume work as soon as possible, state broadcaster CCTV reported.

Still, a raft of global economists, including Citigroup, Nomura and JPMorgan, downgraded their forecasts for China’s economic growth.

“By extension, this will likely have an impact on global growth, too, given China’s large contribution to global growth,” Nomura said.

That means equity markets, especially in Asia, will likely remain under pressure as the number of infections is expected to increase in the weeks ahead.

“Until the rate of new cases peaks, equities are in limbo – too late to sell, too early to buy,” said Sean Darby, Hong Kong-based strategist at Jefferies.

As Chinese markets opened after the 10-day break, Shanghai copper hit its daily selling limit as did Shanghai crude oil while yields on the country’s 30-year government bonds traded in the interbank market were down 18.5 basis points.

Dalian soymeal plunged 4.1% while Dalian iron ore hit limit down as steel prices fell.

In currencies, the safe-haven Japanese yen fell but remained near a three-and-a-half-week high against the dollar at 108.44. The euro was 0.25% lower at $1.1066.

The pound slipped 1.1% to $1.3058 after British Prime Minister Boris Johnson set out tough terms for European Union talks, rekindling fears Britain would reach the end of an 11-month transition period without agreeing a trade deal.

The dollar index, which measures the U.S. currency against a basket of major currencies, was higher 0.25% at 97.638.

Gold, which posted its best month in five in January, slipped as much as 1% to $1,574.5 an ounce. Yields on U.S. debt came off lows.

Oil prices recovered some losses after Reuters reported that OPEC and its allies are considering a further cut to oil output.

Brent crude was last down 0.3% at $56.44 a barrel after falling more than $1 at one stage. U.S. crude gained 0.4% to $51.78. – Reuters


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