Stocks climb after China rate cut

Stocks climb after China rate cut

Stocks climb after China rate cut

Stocks climb after China rate cut

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Global shares rebounded Friday on China’s interest price cut, after having slumped yesterday on fears that sky-excessive inflation could spark an international downturn.

“Markets were seeking out an excuse to dance, and a China price cut provided the reason,” IG analyst Chris Beauchamp instructed.

“It isn’t much when set against the broader (rate) tightening we are seeing globally, but equities do look a bit stretched to the downside in the short term.”

China’s central bank announced it would lower its five-year loan prime rate — a key interest rate governing how lenders base their mortgage rates — to 4.45 percent from 4.6 percent.

That injected optimism among traders that it could boost the world’s second-largest economy from a Covid-induced stupor.

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“The rate cut announced by the PBOC (People’s Bank of China) is obviously good news and is clearly targeted at revitalizing the ailing property market which continues to suffer due to the crackdown last year and Covid lockdowns this,” said Craig Erlam, senior market analyst at OANDA.

“This could help to revive a hugely important part of the economy,” he added, but “whether it’s enough to help China hit its 5.5 percent growth target this year is another thing.”

The news comes in contrast to other major central banks — like the US Federal Reserve and the Bank of England — that are raising borrowing costs to combat rocketing consumer prices.

European equities were buoyed Friday also by a surprise jump in UK retail sales last month, despite the nation’s inflation striking a 40-year peak of nine percent.

“European markets are staging gains to round up a hectic week for markets,” said Victoria Scholar, head of investment at trading firm Interactive Investor.

 

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– Rollercoaster ride –

 

Markets had taken a beating Thursday on intensifying recession worries.

Wall Street has faced the brunt of selling, suffering its worst batterings in two years over the past couple of sessions.

Downcast earning reports from retailers have heightened market uncertainty at a time of rising interest rates, surging energy prices, China’s Covid lockdowns, and Russia’s ongoing war on Ukraine.

“It has been a rollercoaster ride for markets this week after Thursday’s bloodbath when US equities suffered their worse session since 2020 with that negativity reverberating across global stock markets,” added Scholar.

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World oil prices were steady as traders paused for breath at the end of a volatile trading week.

In Paris, shares in French power firm EDF rose 2.5 percent to 8.50 euros despite announcing even more delays and vast cost overruns for its planned giant nuclear plant in southwest England.

The firm revealed Thursday that the cost will balloon to as much as £26 billion — and not begin generating electricity until June 2027.

Hinkley Point C, which goals to offer 7 percent of Britain’s general power wishes, had previously been predicted to a fee as much as £23 billion with a start-up date of a year earlier.

EDF said in its declaration that there might be no extra value to British purchasers.

 

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– Key figures at around 1330 GMT –

 

London – FTSE 100: UP 1.7 percent at 7,426.39 points

Frankfurt – DAX: UP 1.6 percent at 14,108.73

Paris – CAC 40: UP 1.2 percent at 6,348.12

EURO STOXX 50: UP 1.4 percent at 3,692.06

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New York – Dow: UP 0.5 percent at 31,417.93

Hong Kong – Hang Seng Index: UP 3.0 percent at 20,717.24 (close)

Shanghai – Composite: UP 1.6 percent at 3,146.57 (close)

Tokyo – Nikkei 225: UP 1.3 percent at 26,739.03 (close)

Brent North Sea crude: UP less than 0.1 percent at $112.09 per barrel

West Texas Intermediate: UP less than 0.1 percent at $112. per barrel

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Euro/dollar: DOWN at $1.05 from $1.0588

Pound/dollar: UP at $1.24 from $1.2467

Euro/pound: DOWN at 84. pence from 84.93 pence

Dollar/yen: UP at 127. yen from 127.79

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