Well, today we got one, according to the WSJ, as: Stocks and oil futures tumbled and Japan’s yen hit its highest intraday level against the dollar since October 2014, as investors struggled to reconcile recent market gains with unease over the pace of global growth.
The latest tumult erupted after the Reserve Bank of Australia on Tuesday cut its benchmark rate by one-quarter of a percentage point to 1.75%. The move reflects soft inflation and economic sluggishness driven in part by weak demand from China, the largest buyer of Australian exports. Adding to concerns were a drop in Chinese manufacturing and signals that eurozone growth is slowing more than previously forecast, traders said.
Tuesday’s developments reflect worries that have shadowed a surprising 2016 recovery in the prices of stocks and many commodities. Global growth has slowed this year, prompting major forecasters to cut their outlooks. Yet in recent months the decline of the U.S. dollar and easier policy from global central banks have helped fuel gains in many riskier assets, allowing the Dow industrials to recover from a decline of as much as 10% earlier this year.
In other markets the Hang Send was down 1.3%, the Australian S&P/ASX 200 shaved off 1.4% after the above-mention rate cut, the Korean Kospi edged 0.79% lower and the Shanghai Composite Index slipped 09.4%. Another problem hanging over area banks, though not much talked about, is the gap between loan loss reserves and bad loans should things get worse, estimated by some at around $60 billion should we return to 2008-like conditions. An estimated third of that gap is in one country, China.
No comments:
Post a Comment