Global stocks up on China central bank credit support

AP and AFP

BEIJING/HONG KONG–World stocks rose Tuesday after China’s central bank injected extra credit into its financial system, helping to offset concern about slower Chinese growth.

Markets were uneasy the day before after China’s fourth-quarter growth declined slightly from the previous quarter but confidence rebounded after the Chinese central bank promised extra liquidity in the financial system. The move comes ahead of the Lunar New Year holiday, when credit often is tight.

“This will reduce the credit crunch fears and assure funding continues to flow into the Chinese economy over this period,” said strategist Evan Lucas at IG Markets in a report.

In Europe, France’s CAC-40 gained 0.2 percent to 4,329.53 and Germany’s DAX was up 0.3 percent at 9,743.28. Britain’s FTSE 100 was little changed at 6,838.97.

Wall Street was set to open higher after a long weekend, with Dow and S&P 500 futures both up 0.3 percent. Analysts say investors are looking ahead to U.S. corporate earnings and the Federal Reserve’s next meeting Jan. 29.

Asian markets rose on Tuesday, with Japan’s Nikkei index the standout performer thanks to a weaker yen, as investors moved in for cheaper stocks following the previous day’s sell-off. With US markets closed Monday for a public holiday, investors shrugged off flat Chinese economic growth figures a day earlier to send China shares higher after the country’s central bank moved to ease fears of a cash crunch. In Tokyo, the benchmark Nikkei rose 0.99 percent, or 154.28 points, to close at 15,795.96, Seoul rose 0.52 percent, or 10.11 points, to 1,963.89 and Sydney added 0.69 percent, or 36.5 points, to finish at 5,331.5. Hong Kong added 0.45 percent, or 104.17 points, to 23,033.12 and Shanghai climbed 0.86 percent, or 17.06 points, to 2,008.31. The Nikkei enjoyed a pick-up ahead of a two-day Bank of Japan policy meeting that ends on Wednesday, with some speculation that it will announce fresh measures in its stimulus programme. CLSA equity strategist Nicholas Smith said there were rumors the BOJ might make an announcement on Wednesday regarding its asset-purchasing program. However, he told Dow Jones Newswires that “any additional easing measures aren’t likely until around the time of the April consumption-tax hike which is when they would be the most effective”. In Shanghai, shares advanced after the central People’s Bank of China said late Monday that it had provided short-term liquidity to some large commercial banks to avert a cash crunch as investors gear up for a flood of new stock listings that many fear could lead to a share glut.