Blueprints for a new China

Blueprints for a new China

By Tracey Warren (Stockbroking Sales Executive, CMC Markets Stockbroking)

Ambitious China reform plans took stock markets on a ride overnight with the Dow Jones Industrial Average and S&P 500 breaking key psychological levels at 16,000 and 1,800 respectively. Low interest rates and continued accommodative policies in the US have meant equities are very much in vogue at the moment and seemingly the place to be. Comments from billionaire investor Carl Icahn suggesting healthy third quarter US Corporate earnings are merely a mirage and that Wall Street may be shaping up for “a big drop” dampened the euphoria with both the Dow and S&P faltering into the close.

Chinese shares posted their biggest gain in almost two years as China announced its most radical social and economic reforms in decades which include lifting the only-child-policy. High yielding currencies saw some benefit with the Australian dollar sitting at 0.9373 this morning as the news drove the safe have US dollar and Yen lower.

European markets also caught onto the positivity with data showing an improved economic outlook for the region adding to the euphoria which saw the FTSE close at fresh five year highs at 1304.25 and the German Dax also chalking an all-time high of 9225.43.

The local market seemingly ignored the positive lead posting a damp local session yesterday. The S&P 200 fell immediately on the open before recovering to end the session with a sea of red and down 17 points.

Oil markets ended a week of sharp gains with Brent falling to USD 108.00 a barrel territory. Gold lost some of its Yellen shine falling US $15.80 to US $1272.00 an ounce.

Today will see the RBA November policy meeting minutes released this morning which will likely impact the currency along with building permits and housing starts data for the states tonight.
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