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US Markets Down; EU Inflation Lower as China Lowers Their Reserve Ratio

US Markets Down; EU Inflation Lower as China Lowers Their Reserve Ratio
The international stock markets were mixed overnight
Mar 01, 2016 By Ben Khouri

The international markets were mixed overnight, as yesterday’s lower European inflationary figures have increased uncertainty. Haven assets such as Gold surged as a result.

US Markets Down

The US market had contracted overnight. With the Dow Jones Industrial Average and the NASDAQ declining 0.7%. Likewise, the S&P 500 contracted almost 16 points, or approximately 0.8%, to 1,932.23 points.

WTI Crude surged over 3.6%, to almost US$34 a barrel, as the NYSE Energy Sector Index adding almost 0.4%, with energy companies on the S&P 500 was down around 0.1%.

Late last week, US Q42015 GDP grew 1% (Q/Q). This came as a surprise, as analysts were projecting a 0.4% growth rate.

EU Deflationary Pressures

The European markets were mixed overnight, as deflationary pressures in the European bloc had increased uncertainty amongst European investors. The German DAX declined almost 0.2%, or approximately 18 points, or over 9,495 points. Whilst the FTSE 100 had finished slightly in the green, gaining 0.02%, or around 1 point, to 6,097 points.

EU inflationary data was much lower than expected, showing signs of deflationary pressures within the EU, as CPI figures surprised investors, with prices in fact dropping 0.2% in February. As a result, spurring demand for safe haven assets, such as gold, to up to US$1,240oz overnight.

This puts increasing pressure on the ECB, who on the 10th of March, meet again to decide on whether they will increase stimulus in an already slowing economy.

China Increases Stimulus; Lowers Reserve Ratio

The Asian markets declined yesterday, with the Shanghai Composite down almost 3%, or almost 80 points, or approximately 2,688 points. Likewise, the CSI 300 contracted 2.4%, or around 70 points, to 2,877 points. In Japan, the Nikkei 225 lost over 161 points, or 1%, to 16,026 points.

The PBOC (People’s Bank of China) declined their RRR (Reserve Requirement Ratio), enabling banks to loan out more money to the economy, in an effort to further boost economic activity in a slowing China.

ASX Remained Steady

In Australia, the S&P/ASX 500 finished barely in the green yesterday, adding approximately 1 point, or 0.02%, to around 4,880 points.

Santos (ASX:STO) and Woodside Petroleum (ASX:WPL) added almost 2.8%, whilst the latter lost over 2.3%, to $3.31 and $25.35.

Iron Ore Giants BHP Billiton (ASX:BHP) and RIO Tinto (ASX:RIO) finished 0.1% lower, whilst the latter added 0.7%, to $15.37 and $40.28 respectively.

Gold miners Northern Star Resources (ASX:NST) and Newcrest (ASX:NCM) both declined yesterday, to almost 3% and 1.4%, to $3.90 and $17.50 respectively.

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Ben Khouri Author: Ben Khouri Mar 01, 2016

Ben Khouri is a financial editor for Wise-Owl with a particular focus on the top ASX 300 companies. Having a vast background in economics and finance, Ben provides financial commentary & analysis as well as global market updates, which guide investors in devising investment strategies. Ben specialises in analysing economic data and global events from around the world and examines the impacts they have on the major equity markets.

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