PBC intervention offsets weak US data
There were GDP revisions on both sides of the Atlantic today, starting with the UK’s second quarter growth which was adjusted up to -0.4% from -0.5%. The news of a downward revision to US growth over the same period, from 1.7% to 1.3% (both at annual rates), was however less well received. The latter was accompanied by relatively weak durable goods orders, which shrank 1.6% on a core basis (i.e. excluding volatile transportation items), well below expectations of a 0.3% gain. Combined with a greater than anticipated decline in pending home sales in August, the data painted a rather despondent picture of the world’s largest economy.
Counteracting this negativity was news that China’s central bank has injected $58 billion into its domestic money markets over the past three days. Interbank lending rates have risen recently as fears intensified that banks were going to hoard cash to cover withdrawals during a weeklong public holiday to commence on Sunday, and to meet quarter end capital requirements. News of easing measures was welcomed give concerns over the Chinese economy.
There was little in the way of corporate news flow amid London’s blue-chips, the FTSE 100 finishing up 0.2% to 5779. Whilst there were no major company specific stores, it appeared the more cyclic stocks were leading the index higher, likely a reflection of the moves from the People’s Bank of China. Major US indices were more than 0.5% higher at the time of writing.
This was posted in Bdaily's Members' News section by James .