Oil again didn’t manage to strengthen above $50. It spent the best part of yesterday trading in a $50.3 – $50.7 range per barrel of Brent. However, in the evening the price began to fall and by Tuesday morning it had dropped to $49.55. It’s most likely that oil was reacting to world stock markets switching from growth to correction.
The majority of Asian stock markets have met Tuesday in the red zone. The Nikkei 225 fell by 0.9%. The ASX Australia was down 1.0%. The Shanghai Composite rose by 0.5%, and the Hang Seng lost 0.8%. Futures for the S&P 500 were trading at 2093; 0.2% down on the previous trading day.
The Chinese central bank announced that it will use various instruments to support an optimal volume of liquidity and that of credit and societal borrowing. The People’s Bank of China will continue with its reserved monetary policy: simultaneously preserving neither an approach that is too lax, nor one that is to firm. The regulator made this clear in an announcement published after a currency policy meeting for Q2. The central bank will improve financing and credit structures, increasing the share of direct financing, whilst lowering the cost of societal borrowing.
The USD was trading slightly up against the yuan at 6.6692 (+0.0039 or +0.06%).
Yesterday’s May EU producer price index was higher (in the current deflationary climate: better) than expected. PPI MoM rose 0.6% (expected: 0.3%), down 3.9% YoY (expected: 4.1%). These stats offered temporary support to the EUR/USD which strengthened from 1.1100 to 1.1160, but there wasn’t much optimism for long as by Tuesday morning the rate had dropped to 1.1130. Today will see Europe publish business activity indices for the service sector in June and the Bank of England’s Mark Carney will speak after a report on financial stability in the UK. The US will see stats for May manufacturing orders and by the end of the day the Fed’s Dudley will speak.