The most entertaining overnight story has to do with the latest farcical development in the Chinese "market" when just after open, it was reported that PBOC Governor Zhou said a trading link with Shenzhen will start this year which promptly sent all Chinese brokerages soaring, and the Shanghai Composite jumped over 3%. And then, out of the blue, the PBOC said the undated comments were actually as of May.
The crash in Chinese equities has been one of the most spectacular market routs since the financial crisis.
China’s stocks have plummeted nearly 30 per cent since their mid-June highs, and a series of measures by the country’s securities regulator have failed to slow the decline. The crash comes after the Shanghai Composite soared nearly 60% since Jan. 1, while the Shenzhen Composite jumped by 120 per cent, easily making them the world’s best performing stock markets.
While the skeleton crew of market participants are still digesting yesterday's uber-dovish, "forward guidance" conversion by the BOE and ECB, driven in response to the Fed's increasingly tight (at least relatively) monetary policy, they now have month's biggest economic and market catalyst to look forward to.
In our Chinese stock market wrap following Friday's unexpected rate cut, which saw the Shanghai Composite storm out of the gate, we said that "we would not be surprised to see China's stocks sliding back into the red very shortly as "sell the news" concerns return, and as the increasingly more addicted "markets" demand even more liquidity from central banks just to stay unchanged, let alone rise to new all time highs." Sure enough, with just minutes to go before
Marc Chandler submits:The focus in North America today will be the FOMC meeting. Since the end of last week, there has been some re-thinking about the outcome of today’s meeting. In particular, many Fed-watchers are playing down the likelihood that the Fed renews its asset purchases. It was one of three steps that Fed chief Bernanke suggested (in late July) as possible ways the Fed could provide more support for the economy.
Michelle Galanter Applebaum submits: Chinese Steel Production Inches Down. June Chinese steel production in at 1.79 million tonnes per day (mtpd), a 0.9% decline from May – but still the third highest level of all-time. This means that total steel production is down a nominal 2.9% from the peak in May. Due to an additional day in May vs.