Grim
China data keeps stimulus hopes alive
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[August 10, 2015]
By Lionel Laurent
LONDON (Reuters) - A deepening slowdown in
demand in China took center-stage on Monday, boosting some stock markets
on hopes of more policy stimulus even as it knocked commodity prices.
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China's stock markets bucked broad cautiousness in Asian equities
with major indices up between 2 and 4 percent, while European
trading got off to a subdued start as mining and energy stocks
pulled the pan-European FTSEurofirst 300 equity index down 0.2
percent.
Chinese producer prices in July hit their lowest point since late
2009 and exports tumbled 8.3 percent in the same month, stoking
expectations of more action from the central bank after months of
intervention by the authorities to tame China's unruly stock market.
"Expectations of further easing are building and announcements of
liberalization have boosted the equity market," said Kit Juckes,
senior FX strategist at Societe Generale in London.
The outlook in China contrasted with solid U.S. data on Friday that
appeared to keep expectations on track for an interest rate rise as
early as September.
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The dollar stayed close to a nearly four-month high against a basket
of currencies on Monday, while 10-year German and U.S. Treasury
yields were one basis point higher.
"The dislocation from a strong dollar, rising long rates and falling
oil prices is still being factored into share prices in our view,"
said Sean Darby, strategist at Jefferies.
The MSCI All-Country World index was flat, while emerging-market
equities were up 0.1 percent.
There was also some optimism over Greece, where official comments
pointed to a speedy wrap-up of bailout talks designed to save the
country from financial ruin.
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Commodity prices took a hit: London copper traded at six-year lows
and crude oil futures touched fresh multi-month lows. London-listed
mining shares like BHP Billiton and Anglo American fell more than 2
percent.
The Malaysian ringgit plumbed lows last seen during the Asian
financial crisis 17 years ago, after a fall in foreign exchange
reserves raised doubts over the currency's ability to withstand
pressure from political uncertainty and slower growth.
The Turkish lira was a touch higher despite an attack on the U.S.
consulate building in Istanbul, while 10 people were injured in a
car bombing at a police station overnight, weeks after Turkey
launched what it described as a "synchronized war on terror".
(Editing by Keith Weir)
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