"News that OPEC would be having a September meeting with certain members keen to push for supply cuts again served as the impetus for oil prices to rally".
-Angus Nicholson, Brokerage firm IG
According to the National Bureau of Statistics, China's producer deflation slipped to its weakest mark in nearly two years in July, showing a pure positive sign of improving economic situation in the world's second largest economy.Chinese inflation also weakened further during the previous month, adding to the central bank's recent intentions for more "innovative" monetary policies that highlight liquidity as opposed to further rate cuts. In the meantime, the producer price index, declined fell 1.7% on a yearly basis in August, less than the 2% drop forecasted by economists as well as significantly improved than the 2.6% plunge in June. The reasons for that could be a rebound in commodity prices, which in turn reduced deflationary pressure. The People's Bank of China targets annual inflation at 3%.
Meanwhile, Chinese PPI has been disappointing for around four years but narrowing declines during the last three months have spurred hopes the world's second-largest economy may eventually end its painful slowdown. According to the researchers with ANZ, the rise of PPI "should benefit the corporate sector's profitability", but clarified that it will mainly help state-owned enterprises, the impact on private sector investment, in turn, will be limited.
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