Stocks
shrug off China data, Fed weighs on markets
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[September 14, 2015]
By Nigel Stephenson
LONDON (Reuters) - Stocks rose on Monday,
shrugging off tepid Chinese economic data while the dollar weakened
before a U.S. Federal Reserve decision on whether to raise interest
rates for the first time since 2006 later this week.
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Oil prices fell again on falling demand which analysts said could
take a further hit if interest rates rise in the world's biggest
economy.
The combination of worries about slowing growth in China and higher
U.S. borrowing costs have weighed on markets for weeks, becoming
more acute as this week's Fed meeting has approached.
A Reuters poll on Friday showed a small majority of forecasters
still expect a Fed hike on Thursday, though markets-based models
suggest policy tightening will be delayed.
Growth in Chinese investment and factory output in August lagged
forecasts and, after weak trade and inflation data last week, made
it more likely that third-quarter economic growth may dip below 7
percent for the first time since the financial crisis. Only retail
sales beat forecasts.
Shares fell in China and Japan, though MSCI's main index of
Asia-Pacific stocks, excluding Japan, rose 0.5 percent and European
shares followed them higher.
The pan-European FTSEurofirst 300 index rose almost 1 percent with
Britain's FTSE 100 index up 1.2 percent.
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China's Shanghai Composite index dropped 2.8 percent and the CSI 300
index of the biggest listed companies in Shanghai and Shenzhen lost
2 percent. Tokyo's Nikkei closed down 1.6 percent.
The dollar dipped against the yen, falling 0.3 percent to 120.24 yen
but and was steady against the euro at $1.1341.
"If there is an uncertain world, if China is slowing aggressively,
then you have a situation where the Fed may well reconsider raising
interest rates," said Bank of New York Mellon FX strategist Neil
Mellor in London.
"What we're seeing is a general back-off from the view that the Fed
is raising rates."
In emerging markets, Turkey's lira fell to a record low of 3.064 to
the dollar
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Oil prices fell nearly 1 percent on the prospect of dwindling
demand, though reduced U.S. drilling, as measured by a rig count,
offered some support.
Brent crude <LCOc1>, the global benchmark, was down 44 cents at
$47.70 a barrel.
"Both the supply and demand pictures look less favorable over the
coming months ... Outside the U.S., oil fundamentals appear to be
slipping seasonally," Morgan Stanley said on Monday.
Broadly stronger stocks weighed on core government debt. German
10-year Bunds, the euro zone benchmark, rose 1 basis point to 0.66
percent while U.S. 10-year Treasuries yielded 2.19 percent, up from
2.18 percent at Friday's New York close.
Copper turned lower in London on worries over China and the Fed.
Three-month copper on the London Metal Exchange slipped by 1 percent
to $5,316.50 a tonne.
Gold held steady at around $1,107 an ounce.
(Additional reporting by Lisa Twaronite and Hideyuki Sano in Tokyo,
Henning Gloystein in Singapore and Patrick Graham in London; Editing
by Toby Chopra)
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