Stocks Rise With Oil After China Rates as Euro Falls 

stocks img

Global stocks climbed, and oil and metals gained after China cut interest rates. The euro weakened and bonds in the region rose after Mario Draghi said the European Central Bank must drive inflation higher.

The MSCI All-Country World Index advanced 0.2 percent at 11:21 a.m. inLondon, with the Stoxx Europe 600 Index rallying 1.3 percent and Standard & Poor’s 500 Index futures up 0.5 percent. Oil rose for a second day as copper climbed 1.1 percent. The euro fell 0.8 percent against the dollar, and bonds from Germany to Spain and Italy gained. The yen strengthened for the first time in seven days as Finance Minister Taro Aso said its decline has been too fast, while the cost to protect Japanese government debt against default rose to a 13-month high. The ruble advanced for a fifth day.

Shares extended gains after China cut benchmark interest rates for the first time since July 2012, while Draghi said the ECB needs to accelerate inflation quickly and may broaden its asset-purchase program. The People’s Bank of China said today it will provide liquidity support through multiple monetary policy tools when necessary. Data this week showed Asia’s two largest economies struggling, with Japan falling back into recession and Chinese factory activity at a six-month low.

“There are two key drivers, with the first being Draghi being the most dovish that he’s been, saying inflation needs to be boosted as soon as possible, which makes quantitative easing more likely,” Steen Jakobsen, chief investment officer at Saxo Bank A/S in Copenhagen, said in a phone interview. “The decision of the Chinese central bank to cut interest rates shows that China is also reacting to the slowdown. This makes the market perceive a perfect risk-on day for Friday.”

The advance in global shares takes the MSCI All-Country World Index up 0.6 percent this week, the most since October. Commodity and energy companies rose the most today.

China lowered the one-year deposit rate by 0.25 percentage point to 2.75 percent and the one-year lending rate by 0.4 percentage points to 5.6 percent, effective tomorrow, the People’s Bank of China said on its website.

Source: bloomberg – Stocks Rise With Oil After China Rates as Euro Falls

Leave a Comment


Broker Cyprus TopFX