Hong Kong’s HK 50 index rose and the Chinese yuan edged up as traders assess the outcome of the first virtual meeting between US President Joe Biden and Chinese leader Xi Jinping.
China’s new bank loans head north in January
In China, new bank loans tacked on to a one-year maximum in the first month of this year, as a Reuters survey disclosed. It became possible due to the fact that the Chinese cabinet kept spurring commercial lenders to extend more credit to cash-strapped businesses in a decelerating economy.
In January, Chinese financial institutions were anticipated to have extended up to 2.8 trillion Yuan in net new loans, which is more than December’s outcome of 1.08 trillion Yuan. It would be the highest outcome since the record result of 2.9 trillion Yuan demonstrated in January 2018.
For the entire 2018, the Asian country’s financial institutions extended a record 16.17 trillion Yuan in new loans after the major financial institution on four occasions in 2018 reduced the amount of cash that they needed to keep as reserves.
However, it didn’t stop the world's number two economy from soaring at the weakest tempo since 1990. Market experts told that a faster tempo of credit expansion is required to keep the American economy from decelerating too fast.
In January, the country’s major bank cut the reserve requirement ratio for financial institutions by 100 basis points, thus stimulating them to lend more. Market experts expect a further 150 bps dive by year-end.
At the end of 2018, China’s major bank has also deployed fresh tools, including the Targeted Medium-Term Lending Facility. The measure is expected to provide longer-term liquidity for financial institutions to back loan surge.
However, China isn’t anticipated to flood the national financial system with credit at once. Instead, the major bank will stick to its line on keeping policy neither too loose not too tight.
Previously, some sources revealed that the PBOC urged some financial institutions to moderate their tempo of lending last month.
The last week was so eventful for traders: FOMC Meeting, Bank of England’s rate decision, the OPEC+ meeting, and also NFP. This week is going to be interesting as well! Let’s see what you should focus on.
A selloff in stocks stopped. S&P 500 has reversed up from the 100-day moving average. It should be the perfect time to buy the index.
As Europe moves into recession, next week may provide us with some amazing trading opportunities. Here they are!
Main news that will drive the market in the upcoming week include CB Consumer Confidence Index, Canadian GDP, and US Core PCE Price Index
The Federal Reserve (Fed) will announce its Interest Rate Decision and make a statement about the future monetary policy on Wednesday, September 21, GMT+3. After the higher-than-expected inflation numbers published on September 13, there’s almost no doubt the Federal Reserve will come up with another 75-basis-point rate hike. However, surprised by the CPI numbers, several Fed members announced the possibility of a 100-basis-point rate hike on Wednesday.