Increased credit availability in China gave the nation’s stock market a boost on Monday, as anxiety about the China’s economic slowdown faded.
Anxiety about China’s economic slowdown continued to abate on Monday, as a surge in available credit sent the Shanghai Composite Index to its highest level of 2014. The consumer staples sector led the day’s stock market gains. During the month of January, China’s financial institutions provided over $200 billion in new loans. The Shanghai Composite Index climbed 0.92 percent to 2,135 (FXI). Hong Kong’s Hang Seng Index soared 1.07 percent to 22,535 (EWH).
Although America’s stock exchanges were closed for Presidents’ Day, there was a limited futures trading session on Monday morning. March Dow Jones Industrials futures (DIA) advanced 0.17 percent to 16,154. S&P 500 futures (SPY) rose 0.13 percent to 1,837. Nasdaq 100 futures (QQQ) advanced 0.17 percent to 3,667.
On London’s ICE Futures Europe Exchange, March futures for Brent crude oil advanced 2 cents (0.02 percent) to $109.10/bbl. (BNO).
April gold futures advanced $28.90 (2.22 percent) to $1,329.00 per ounce (GLD).
In Japan, the exchange rate for the yen continued to be the dominant factor in stock market activity. Japanese stocks advanced as the yen weakened slightly from Friday’s stock market close, when the exchange rate was 101.57 per dollar, to 101.60 per dollar during the last hour of Monday’s trading session in Tokyo. A weaker yen causes Japanese exports to be more competitively priced in foreign markets (FXY).
The yen’s decline resulted from disappointment following the news that Japan’s GDP expanded at an annual rate of only 1.0 percent during the fourth quarter, after growing at a 1.1 percent annual rate during the third quarter of 2013. Although the yen initially gained strength on the news, it subsequently retreated. The Nikkei 225 Stock Average advanced 0.56 percent to 14,393 (EWJ).
In Europe, stocks remained relatively unchanged, maintaining the gains which followed Friday’s release of fourth-quarter GDP data from Eurostat. In the Eurozone, fourth-quarter GDP expanded by 0.3 percent, compared with 0.1 percent during the third quarter. For the greater, 28-nation European Union, fourth-quarter GDP expanded by 0.4 percent, compared with 0.3 percent during the third quarter. The Euro STOXX 50 Index finished Monday’s session unchanged at 3,118 – remaining above its 50-day moving average of 3,050. Its Relative Strength Index is 57.93 (FEZ).
Bottom line: While America’s stock exchanges were closed on Monday for Presidents’ Day, the spotlight shifted to China, where increased credit availability sent the Shanghai Composite Index out of its 2014 slump, to its highest level since the new year began.
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