The dollar has weakened as Chinese monetary stimulus coursed through commodity markets yesterday and gave many emerging markets currencies a lift, said ING analysts led by Chris Turner.
The jury is out on whether this China stimulus story is an enduring one for global currencies. However, evidence of a US slowdown continues to accrue and investors do seem to have shifted to a sell-dollar mindset.
Chinese stimulus was the top story in FX markets yesterday. Metals markets rallied and the currencies of the emerging market commodity exporters in Latin America and South Africa had a good day.
The jury is out on whether this theme can be maintained. For example, were Chinese monetary stimulus backed up with some fiscal stimulus (consumption vouchers?) then we would have a little more confidence that these short-term trends could follow through.
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The British online property portal Rightmove has rejected an improved £6.1bn takeover proposal from billionaire Rupert Murdoch’s REA Group, saying it undervalued the company.
The Australian group said on Monday that it had made a third offer for the company, worth £6.1bn. But Rightmove said the increased proposal “continues to be unattractive and materially undervalues the company and its future prospects”.
REA responded swiftly, saying it was “disappointed” by the latest rejection, and “frustrated” that the rejections aside, “REA has still had no substantive engagement with Rightmove”. It added:
REA urges Rightmove shareholders to encourage the board of directors of Rightmove to engage in constructive discussions with REA to work towards a recommended transaction,
ahead of next Monday’s “put up or shut up” deadline.
Chinese stocks have rallied for a second day, fuelled by Beijing’s stimulus, while the rest of Asia is more mixed.
The mainland China CSI 300 index rose by 1.68% following a 4.3% jump the day before, while Hong Kong’s Hang Sing added nearly 1% after Tuesday’s 4.1% leap. Japan’s Nikkei slipped by 0.26% while South Korea’s Kospi lost 1%.
The People’s Bank of China launched a blitz of stimulus measures to support its economy, cutting the amount of cash banks must hold on their books, lowering several key interest rates and unveiling more support for the property market.
The news lifted stocks around the world. On Wall Street, the S&P 500 celebrated its 41st record high yesterday.
However, Ipek Ozkardeskaya, senior analyst at Swissquote Bank, cautioned:
The problem is, the stimulus measures will take time to show in the economic data. And more worryingly, they won’t do much to fix the country’s deepest issues – they won’t reverse local governments’ heavy debt burden, China’s aging population, and will hardly boost the demand-led growth. As such long-term investors appreciate the efforts but prefer to watch from a distance for now.
The Agenda
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8.30am BST: Sweden Riskbank interest rate decision
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12pm BST: US MBA Mortgage applications
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3pm BST: US New Home sales for August
This post was originally published on here
