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PBOC helps the markets by injecting additional liquidity
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Japanese economy fell by a staggering 6.3% YoY
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Bitcoin now trading below $10,000.00 after a huge price fall
Monday did bring markets significant incentives as People’s Bank of China cut the interest rate on its medium-term lending by 10bps to 3.15% and injected additional liquidity into the system through open market operations. Such a move is considered as a support to stock markets amid rising coronavirus fears and uncertainty. The effects could be particularly seen on Chinese stock markets: Shanghai Composite surged 2.28% while HSCEI rose 0.87%. The rest of Asia had rather mixed feelings as Nikkei, Kospi and S&P/ASX fell by the end of the session.
Investors in Europe seem to be optimistic as well as all major European indices managed to rise today. In most of the cases the gains were quite modest, though. Nevertheless, DAX 30 hit yet another all-time high. American stocks are not trading today due to a holiday.
As far as the coronavirus outbreak is concerned, there have been more than 71,000 cases confirmed including 1,775 deaths globally. Many companies in China still do not operate although they were supposed to reopen today.
In terms of economic data, a shocking reading came from Japan. It turned out that Japanese economy shrank 1.6% on quarter in the last three months of 2019 (est. -1%) meaning that the annualized GDP fell by a staggering 6.3% (est. -3.8%). Following October’s tax hike, Japanese economy seems to be in trouble now. Coronavirus will surely have a significant impact on the economy and as a matter of fact, the business activity in Japan was already not promising before the virus outbreak.
One could also notice a huge Bitcoin price fall as BTC is currently trading at around $9,680.00. After losing the $10,000.00 level, BTC reached the key support level - the lower limit of Overbalance structure that coincides with the upward trendline.
Tomorrow RBA will publish minutes from the latest rate meeting, which may be substantial for AUD traders. Moreover, we will get to know some crucial hard data from the UK including unemployment rate in December.
Chinese stock markets surged today as PBOC injected additional liquidity into the system. Source: xStation5
