- World stock markets rallied on Thursday after central banks in New Zealand, India, and Thailand announced surprise cuts to interest rates.
- China also fixed its reference rate at a stronger level than expected, and released positive trade data for July.
- Oil prices rebounded after Saudi Arabia said it was considering all options to stave off further declines.
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World stock markets rallied on Thursday after central banks in New Zealand, India, and Thailand announced surprise cuts to interest rates, fueling demand for riskier assets. China also took steps to calm investors and released better-than-expected trade data.
The Reserve Bank of New Zealand slashed rates by a larger-than-expected 50 basis points, the Reserve Bank of India trimmed them by an unprecedented 35 basis points, and the Bank of Thailand reduced them by 25 basis points. The cuts followed the US Federal Reserve’s 25-basis-point trim at the end of July.
“The cooperative action from the central banks cooled off the selling pressure in the equity markets,” said Ipek Ozkardeskaya, senior market analyst at London Capital Group.
Meanwhile, China fixed its daily reference rate at a stronger level than analysts expected – although it still exceeded 7 yuan to the US dollar for the first time since 2008, according to Bloomberg. Chinese trade data for July also showed a rebound in exports and a smaller-than-expected drop in imports, according to Reuters. Traders may also have decided the recent equities selloff was overdone, or reacted to the slump in Treasury yields over the past week.
However, “one common factor that all investors seem to agree upon is the expectation of lower interest rates going forward,” said Hussein Sayed, chief market strategist at FXTM.
Oil prices, which have plunged by more than 15% since late July, also rebounded after Saudi Arabia said it was talking to other oil producers and considering all options to stave off further declines, according to Bloomberg.
The stock-market rally could prove short-lived given the worsening outlook for US-China trade relations. The Trump administration is set to slap 10% tariffs on $300 billion of Chinese goods at the start of September. China expects those to rise to 25% as it refuses to bend to America’s will and buy agricultural products, Fox News correspondent Edward Lawrence tweeted on Wednesday, citing Chinese trade sources.
“Washington’s repeated bullying has made it meaningless to continue trade talks in short run,” Hu Xijin, the editor of China’s Global Times, tweeted. “China and the US are caught in a stalemate worse than last round.”
Here’s the market roundup as of 9.00 a.m. (4.00 a.m. EST):
- Asian markets rallied with China’s Shanghai Composite up 0.7%, Japan’s Nikkei up , and Hong Kong’s Hang Seng up 0.5%.
- European equities have climbed with Britain’s FTSE 100 up 0.4%, Germany’s Dax up, and Euro Stoxx 50 up 0.1%.
- US stocks are poised for a positive open. Futures underlying the Dow Jones Industrial Average, S&P 500, and Nasdaq were all up.
- Oil prices rebounded with West Texas Intermediate up 3% to $52.61 per barrel, and Brent crude up more than 2% to $57.59.