China's central bank cut interest rates

Monday, May 11, 2015

Asian equity markets rallied strongly overnight. The Nikkei Index gained over 1.25% towards 19,700, while the Hang Seng index climbed higher by 0.78% towards 27,800. China’s CPI increased to 1.5% y/y in April from 1.4% y/y in March, missing analysts’ expectations of 1.6%. Furthermore, China’s 1-Year lending rate fell slightly to 5.10% on 10th May compared to 5.35% previously.

Hang Seng index rallies towards 28,000

HSI Index (Hong Kong Hang Seng I 2015-05-11 09-00-54

China’s central bank cut interest rates for the third time in six months in order to provide strong support for the country’s economy. The People’s Bank of China reduced the one-year lending rate by 0.25% points to 5.1% and cut the one-year deposit rate by the same amount to 2.25%, effective today. Following the recent measures, the central bank will also raise the limit on what banks can pay savers.

Crude oil prices hovered within the recent range this morning as WTI front month futures remained under pressure after trading below $60 per barrel while Brent futures edged slightly this morning towards $66 per barrel. Following a report in the Financial Times, China has overtaken the US as the world’s biggest importer of crude oil, suggesting a possible increase oil demand in China.

European equity markets reversed last week’s gains and slid lower this morning as risk appetite has been limited due to ongoing concerns regarding Greece’s economic stability. The CAC and DAX remained in negative territory while the London equity benchmark index bucked the downtrend and continued its recent upside momentum climbing towards 5,100.

The USD index extended gains for third consecutive session today and climbed above 95.0 this morning against a basket of currencies. The stronger USD currently adds some pressure to most commodity markets, limiting any strong upside potential. On the other hand, the euro extended losses for third straight session retreating towards 1.1150 against the USD. Concerns regarding Greece’s debt issues continue to dominate the markets, adding pressure to the European currency.

EURUSD

EUR Curncy (Euro Spot )  2015-05-11 09-00-14

 

Events for today:

0245

CN

Apr

Trade Balance (09/05/2015)

0245

CN

Apr

CPI & PPI

1200

UK

May

BoE Rate

1500

US

Apr

Labour Market Conditions Index

All times UK Local Time

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