Friday, July 10, 2020
Martin Hennecke

Markets cheer on PBOC rate cut hope
The global stock market turned jittery yesterday as the worsening coronavirus situation in Europe offset the optimistic sentiment ignited by the news of China's potential deposit rate cut. The People's Bank of China is in talks to cut the deposit rate for the first time since 2015 to help boost banks' profitability, the Financial Times reported. Futures on all three major American indexes turned lower, and equity markets across Europe and the UK lost steam from an earlier surge as euro-region leaders inched toward a stimulus accord. US President Donald Trump and Vice President Mike Pence held a conference call yesterday with Wall Street investors to discuss the economy, the Federal Reserve and other issues. In Hong Kong, the benchmark Hang Seng Index jumped by 863.70 points, or 3.81 percent at 23,527, as Washington moved closer to delivering trillions of dollars of stimulus to cushion the economic blow from the coronavirus outbreak. In mainland China, the Shanghai Stock Exchange Composite Index closed higher by 2.17 percent, or 59.15 points at 2,781.59 while the Shenzhen Stock Exchange Composite Index shot up by 2.92 percent, or 48.63 points at 1,714.86. In the currency market, the yuan weakened 240 basis points to 7.1009 per US dollar. Standard & Poor's expects the Covid-19 outbreak to dent global economic growth more severely than anticipated, while also estimating that China's GDP will pick up in the second quarter, after contracting by 13 percent year-on-year in the first. Economic activity appears to be resuming in China, with more than one-fifth of American companies in China back in normal operation after the widespread disruptions, a survey by the American Chamber of Commerce in China yesterday showed. "This is one of the areas that I think provides some sense of optimism," the chamber's president, Alan Beebe, said at a news conference. Meanwhile, sportswear giant Nike said yesterday 80 percent of its stores were now open in China and it expects current-quarter sales to be flat in the region.

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