Markets will be watching for China’s next move as signs of a slowdown in the world’s second-largest economy stack up‚ raising expectations it will act to stoke growth.
A looming snap election in Greece and a closely watched conference hosted by the Federal Reserve in the United States are also likely to keep investors on their toes next week.
Fears that Chinese growth is weakening‚ dragging down the global economy with it‚ are already hammering commodities and world stock markets.
Both tumbled on Friday after a survey showed Chinese manufacturing had slowed the most since the global financial crisis in 2009 – adding to other worrying clues about the country’s health‚ including its falling exports.
China devalued the yuan earlier in August‚ by pushing its official guidance rate down 2%. The central bank has said there was no reason for the currency to fall further‚ but investors are bracing for further interest rate cuts.
“It will be all eyes on the Chinese authorities for any further policy support steps‚ alongside the People’s Bank of China yuan fixings and trading swings‚” analysts at Investec Economics said. China is also widely expected to relax reserve requirement ratios for its banks again in the coming months‚ a measure intended to spur lending by reducing the cash they need to hold.
It is trying to keep its economy on course to grow 7% in 2015 – its slowest pace in a quarter of a century.
The cash reserves ratio has already been cut three times this year.
By the end of next week attention may shift to the Rocky Mountains‚ where policymakers are due to gather from Thursday for the Fed’s conference of central bankers‚ finance ministers‚ academics and financial market participants in Jackson Hole.
Fed chair Janet Yellen is not expected to attend‚ raising the prospect that other Fed officials may be more tight-lipped about the likelihood of the first rate increase in almost a decade‚ some analysts said. The prospect of an increase as soon as next month receded this week as the Fed released minutes of the July meeting. They gave no clear signals as to the timing of such a move – which would affect markets across the world.
In the eurozone‚ investors will also be looking at an German economic sentiment survey due tomorrow for a better idea of the scope of the bloc’s recovery.
But the spotlight will mainly fall once again on Greece‚ where Prime Minister Alexis Tsipras has resigned.
The current Greek government aims to strengthen its position in elections after accepting a rescue deal it once opposed. But that creates more uncertainty for markets already on edge over whether Greece will deliver on promised reforms and get its economy and banks back on track. — Reuters
Markets keep eye on China
A looming snap election in Greece and a closely watched conference hosted by the Federal Reserve in the United States are also likely to keep investors on their toes next week.
Fears that Chinese growth is weakening‚ dragging down the global economy with it‚ are already hammering commodities and world stock markets.
Both tumbled on Friday after a survey showed Chinese manufacturing had slowed the most since the global financial crisis in 2009 – adding to other worrying clues about the country’s health‚ including its falling exports.
China devalued the yuan earlier in August‚ by pushing its official guidance rate down 2%. The central bank has said there was no reason for the currency to fall further‚ but investors are bracing for further interest rate cuts.
“It will be all eyes on the Chinese authorities for any further policy support steps‚ alongside the People’s Bank of China yuan fixings and trading swings‚” analysts at Investec Economics said. China is also widely expected to relax reserve requirement ratios for its banks again in the coming months‚ a measure intended to spur lending by reducing the cash they need to hold.
It is trying to keep its economy on course to grow 7% in 2015 – its slowest pace in a quarter of a century.
The cash reserves ratio has already been cut three times this year.
By the end of next week attention may shift to the Rocky Mountains‚ where policymakers are due to gather from Thursday for the Fed’s conference of central bankers‚ finance ministers‚ academics and financial market participants in Jackson Hole.
Fed chair Janet Yellen is not expected to attend‚ raising the prospect that other Fed officials may be more tight-lipped about the likelihood of the first rate increase in almost a decade‚ some analysts said. The prospect of an increase as soon as next month receded this week as the Fed released minutes of the July meeting. They gave no clear signals as to the timing of such a move – which would affect markets across the world.
In the eurozone‚ investors will also be looking at an German economic sentiment survey due tomorrow for a better idea of the scope of the bloc’s recovery.
But the spotlight will mainly fall once again on Greece‚ where Prime Minister Alexis Tsipras has resigned.
The current Greek government aims to strengthen its position in elections after accepting a rescue deal it once opposed. But that creates more uncertainty for markets already on edge over whether Greece will deliver on promised reforms and get its economy and banks back on track. — Reuters
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