The Chinese Government had on Wednesday, 26 November 2008 cut its interest rate by 1.08 percent. This amount of rate cut is not seen in 11 years. This action would believed to be a positive news that will spur borrowing and at the same time support its very own domestic stimulus plan.
Asian markets reacted expectedly with gain with HSI, the Hong Kong bourse posting a gain by 3.81 percent and Straits Times Index, Singapore bourse reserved a early trading losses due to profit taking with a gain by 3.5 percent. KOSPI, Korea bourse posted a significant .72 percent. Asia except Japan and KLSE were seen in the green. Nikkei closed with a fall by 1.33 percent.
The rate cut not only inflicted optimism in Asia markets, it also pushed oil price up on supply demand. Oil rose to $52.72 a barrel on NYMEX after falling the day before.
Light sweet crude had fallen more than $100 from its all time high middle this year 2008.
Dow Jones had also reversed from early trading losses and turned positively in the green. However sentiment remained mixed and profit taking seems inevitable.
Market are more stablized as compared to the previous month. Asia markets are likely to follow on bargain hunting and blue chip could enjoyed some modest gain.
The above are of personal opinion and not at all, an inducement to trade.
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