Chinese Stimulus Talk Boosts Stocks

16th August

Asian stocks increased following on from Chinese Premier Wen Jiabao indicating that the cooling inflation rates give China – the world’s second largest economy – the room to roll out economic stimulus measures to encourage stronger growth.

Slowing growth rates in China have raised fears that the global economy may be weakening and news that China may implement monetary policy measures sent stocks rising, as investors enthusiastically turned away from U.S. markets and the many mixed signals it has been giving off recently.

China’s gross domestic product increased at an annual rate of 7.6% during the April to June period which may be healthy compared to many developed Western economies, however it was the slowest rate of expansion seen for China in three years. Figures released earlier in August showed sharp declines in export and import expansion during the month of July, indicating that external and internal demands were both slowing.

Two of China’s biggest markets, the eurozone and the US, continue to remain weak, helping raise fears that China’s growth may slow even further in the near future, triggering calls for monetary easing policy.

Asian trading overnight saw Hong Kong’s Hang Seng Index gain 0.18%, Australia’s S&P/ASX200 rise 0.65%, whilst Japan’s Nikkei 225 Index gained 1.71%. Dow Jones Industrial Average futures closed up 0.18% whilst the S&P 500 futures closed up 0.19%.

 

Today

Later Today, binary traders will look towards the US for increased volatility as the U.S. is to publish figures on building permits and housing starts, key gauges for the construction and housing sectors. Also weekly government data on unemployment claims are released and a report on manufacturing activity in the Philadelphia area.  Expect a busy day of volatility and trading for the greenback as well as European stock futures indicating a higher opening