Jim Walker, Asianomics' Ltd. chief economist, believes that China's decision to decrease the lending as well as deposit percentage is a sign of a weakening economy and will not help to improve the current economic state. The economist indicates that the situation is more severe than the government initially expected and signifies that the global economy is going to face a slowdown. He added that
Japanese Yen strengthened versus the 17-nation currency on Friday as investors predicted the German exports slumped in April amid worries European debt turmoil is curbing Eurozone's economy. The Yen appreciated 0.7% versus Euro to JPY 99.33 during Asian trading hours. Currently EUR/JPY is trading at JPY 99.15.
Bank of Korea decided to leave its benchmark interest rate unchanged for a 12th consecutive month as slowing inflation gave officials a scope to await for further developments in Europe and China. The board of Central Bank maintained its benchmark at 3.25% in line with analysts expectations.
The price of crude oil declined for a second straight day sending the value closer to longest weekly loss since 1999. The drop was boosted by speculations that slowdown in world's biggest economies US and China may hurt demand for fuel. July Brent oil fell 1.5% or USD 1.49 to USD 98.44 per barrel. July crude lost USD 2.23 to
European equities rose on Thursday after China unexpectedly announced it reduced its benchmark borrowing costs by 25bp. Stoxx 600 Europe gained 1.1%, British FTSE 100 added 1.2% and German DAX improved by 0.8%. French CAC 40 index climbed 0.4% and IBEX 35 advanced 0.3% after Spain successfully sold 10-year bonds..
US shares erased most their daily gains after Fed Chairman Ben Bernake announced the US economy should be reviewed before deciding of additional stimulus. S&P 500 index traded almost flat, slipping 0.01% or 0.14 points to 1,314.99. Dow Jones Industrial Average added 0.37% or 46.17 points and finished at 12,460.96. Nasdaq Composite dropped 0.48% or 13.70 points to 2,831.02.
UK service sector expanded at a steady pace in May, increasing probability that the Bank of England is likely to stick to the current monetary policy. The PMI for the services remained unchanged at 53.3, which means that activity in service sector is growing. Following the positive data, the Sterling appreciated against the Dollar to $ 1.5471 from $ 1.5448.
East European countries are concerned about possible severe turmoil in financial markets in case Greece exits Eurozone, as it might cause depreciation of currencies, tighten credit, as well as hinder export-driven growth. However, central bankers and politicians claim that the countries are more crisis-resistant than they were four years ago, when collapse of Lehman Brothers caused the global financial crisis.
Australian trade deficit dropped to AUD 203 million (USD 201.9 m) in April from a AUD 1.28 bn in March, reported Australia's Bureau of Statistic on Friday. Analysts predicted a slower decline of trading gap to AUD 920 m. Nation's exports in April surged by 3% while imports diminished by 1%.
Japanese economic growth in the first three months of 2012 accelerated at slightly faster pace than predicted. The final estimate was revised upwards from 1.0% to 1.2%. Analysts predicted the gauge to reach 1.1%. The source of increase came from higher private consumption and capital spending.
Japan reported smaller than predicted current account surplus in April, reflecting the negative effect from weakening global demand which is weighing on exports. The nation's current account excess narrowed to 333.8 bn Yen. Economists questioned by Bloomberg expected a drop only to 440.8 bn Yen.
Gold futures fell during electronic trading this Thursday after Ben Bernanke's, U.S. Federal Reserve Chairman, testimony to the Congress. Gold prices for August delivery tumbled $12.10, a 0.7 per cent decrease, to $1,622.10 an ounce in trading session of the New York Mercantile Exchange's Comex division. Silver futures for July delivery slipped 29 cents, a 1 per cent decline, to $29.20 an ounce.
Gold fell on Thursday after unexpected Chinese interest rates cuts, while investors awaited Ben Bernanke's, U.S. Federal Reserve Chairman, testimony to the Congress. Gold futures for August delivery dropped $7.20, a 0.4 per cent decrease, to $1,627 an ounce in trading session of the New York Mercantile Exchange's Comex division.
Futures for natural gas slumped more than 3% in the U.S. morning trading session on Thursday, after the U.S. Energy Administration reported that U.S. gas supplies increased more than expected during the previous week. On the NYMEX, July delivery futures were traded at the level of USD2.333 per MMBtu, shedding 3.65% since the beginning of the session.
The greenback edged lower on Thursday, while the euro rose above $1.26, after Chinese reserve bank unexpectedly decreased its deposit and interest rates by 25 basis points. The ICE dollar's index, which shows currency's relation to its six major counterparts, tumbled to 81.963. The euro ticked higher from $1.2561 to $1.2617.
U.S. stock futures slipped this Thursday as Ben Bernanke, U.S. Federal Reserve Chairman, stated that European debt crisis, as well as probable U.S. spending cuts put at risk the country's economy. The Dow Jones Industrial Average ticked higher 70.39 points, a 0.6 per cent increase, to 12,484.87. The Standard & Poor 500 Index jumped 3.5 points, a 0.3 per cent increase, to 1,318.63, while
USD pushed higher versus other main currencies on Thursday, as the Chairman of the Federal Reserve claimed that Fed is ready to implement economic stimulus measures. EUR/USD hit 1.2560, tumbling 0.17% since the beginning of the U.S. morning trading session; an cable gained 0.37%, consolidating at 1.5553. However, USD grew against JPY, hitting 79.47, and increased versus CHF, reaching 0.9561.
The Euro climbed versus the Yen, reaching 2-week high on China rate cut and successful auction of Spanish government debt. EUR/JPY reached 100.47, which is a two-week high, and consolidated at 100.43, gaining 0.80% in the European afternoon trading session. The pair's support was likely to be found at 99.35, and resistance was prone to be at 101.46.
China has taken the decision to decrease borrowing costs to manage the current recession as Europe's current slowdown jeopardizes global development. According to the People's Bank of China, the lending percentage for one year will be lowered from 6.56% to 6.31% effective 7 June. In addition, the deposit percentage for one year will drop from 3.5% to 3.25%.
Cable trimmed gains on Thursday, as the Chairman of the Federal Reserve disappointed expectations of the market for further stimulus. GBP/USD peaked at 1.5600, a one week-high, and consolidated at 1.5553, which is still a 0.37% gain in the U.S. morning trading session. The support was likely to be at 1.5428, and resistance was prone to be found at 1.5643.
U.S. markets gained this Thursday after Chinese reserve bank unexpectedly decreased its deposit and interest rates by 25 basis points. The Dow Jones Industrial Average rallied 72 points to 12,491. The Standard & Poor 500 Index advanced 10.50 points to 1,319.40 and Nasdaq-100 index climbed 16.50 points to 2,566.50. Petroleum futures ticked higher, while gold and the Greenback retreated.
European markets advanced on Thursday ahead of a Spanish bond auction, as well as Ben Bernanke's, U.S. Federal Reserve Chairman, testimony to the Congress. The Stoxx Europe 600 index rose 0.2 per cent to 240.40. Swedish Nordea Bank AB and Swedbank AB gained 4.3 per cent and 3 per cent, respectively. The CAC 40 index climbed 0.8 per cent to 3,082.91.
The Bank of England has not changed benchmark interest rate for 39 months in a row, leaving it at 0.50%, which is in line with expectations. The central bank also announced that it will maintain purchases of assets at the same level of GBP325 billion, after a GBP50 billion expansion back in February.
Oil futures gained on Thursday as Chinese reserve bank decreased its interest and deposit rates by 25 basis points. Petroleum for July delivery inched higher by $1.31, a 1.6 per cent increase, to $86.34 a barrel.