ETX Capital Daily Market Bite, 25th June, 2013; Markets Rebound; China Woes Remain
June 25, 2013 7:50 am
June 25th 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
European share markets are rebounding this Tuesday morning, shrugging off declines in overseas markets. The risk-tone has improved somewhat after Dallas Federal Reserve head Fisher attempted to downplay the markets’ reaction to central bank tapering saying was overdone. There was some respite for US Treasury bills which have eased after reaching two-year highs in the previous session, with the 10-year now near the 2.51% level down from a high of 2.66% on Monday. That said, US stocks declined in Monday’s trade while Asian markets continued their descent lower overnight, particularly the Shanghai Composite in China which fell around 3.4% amid continued worries over a cash crunch in the country’s financial system.
Stocks in China slid to the lowest level in four years on fears the recent tensions in the money market will worsen the slowdown in world’s largest economy. Instead of quelling the markets’ nerves, China’s central bank said the country should fine-tune its policies as a cash squeeze in the banking system risks exacerbating an economic slowdown and put the onus on lenders to manage their balance sheets better. In an attempt to soothe jitters, the PBoC has released a few statements early this morning in response to the recent developments in the Chinese money markets – it said there remains ample liquidity in the market and the central bank will continue to monitor the money market. It added that it will have flexible management of liquidity and that appropriate management will help to keep lending growth reasonable. The market doesn’t seem to be completely convinced though as traders remain worried that the reluctance by Chinese authorities to intervene with additional liquidity injections will mean the cash squeeze in the system will persist for now, hampering growth in the country.
In the euro zone, attention will be on Greek PM is currently revamping his cabinet in order to restore confidence following failure to dispose of big ticket assets in recent weeks which has undermined the government. Staying on the political situation in the euro zone, Italy’s PM Enrico Letta has to contend with discord in his broad coalition government after his coalition partner Silvio Berlusconi was convicted on charges yesterday and sentenced to 7-years in prison. Separately, there have been reports that Italy is need of a EU backed rescue within the next 6-months as the economic crisis worsens and the credit crunch spreads through Italian corporations – Italy’s FTSE MIB caught in rebound with fellow European peers but yields on the 10-year have edged higher. Looking ahead, we have UK mortgage approvals, US durable goods orders, US consumer confidence and two reports on the US housing industry.
June 25th 2013, Daily Market Bite from Ishaq Siddiqi Market Strategist
European share markets are rebounding this Tuesday morning, shrugging off declines in overseas markets. The risk-tone has improved somewhat after Dallas Federal Reserve head Fisher attempted to downplay the markets’ reaction to central bank tapering saying was overdone. There was some respite for US Treasury bills which have eased after reaching two-year highs in the previous session, with the 10-year now near the 2.51% level down from a high of 2.66% on Monday. That said, US stocks declined in Monday’s trade while Asian markets continued their descent lower overnight, particularly the Shanghai Composite in China which fell around 3.4% amid continued worries over a cash crunch in the country’s financial system.
Stocks in China slid to the lowest level in four years on fears the recent tensions in the money market will worsen the slowdown in world’s largest economy. Instead of quelling the markets’ nerves, China’s central bank said the country should fine-tune its policies as a cash squeeze in the banking system risks exacerbating an economic slowdown and put the onus on lenders to manage their balance sheets better. In an attempt to soothe jitters, the PBoC has released a few statements early this morning in response to the recent developments in the Chinese money markets – it said there remains ample liquidity in the market and the central bank will continue to monitor the money market. It added that it will have flexible management of liquidity and that appropriate management will help to keep lending growth reasonable. The market doesn’t seem to be completely convinced though as traders remain worried that the reluctance by Chinese authorities to intervene with additional liquidity injections will mean the cash squeeze in the system will persist for now, hampering growth in the country.
In the euro zone, attention will be on Greek PM is currently revamping his cabinet in order to restore confidence following failure to dispose of big ticket assets in recent weeks which has undermined the government. Staying on the political situation in the euro zone, Italy’s PM Enrico Letta has to contend with discord in his broad coalition government after his coalition partner Silvio Berlusconi was convicted on charges yesterday and sentenced to 7-years in prison. Separately, there have been reports that Italy is need of a EU backed rescue within the next 6-months as the economic crisis worsens and the credit crunch spreads through Italian corporations – Italy’s FTSE MIB caught in rebound with fellow European peers but yields on the 10-year have edged higher. Looking ahead, we have UK mortgage approvals, US durable goods orders, US consumer confidence and two reports on the US housing industry.
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Ishaq Siddiqi
Market Strategist
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