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China reforms and money inflows keep rally going

CMC Markets

Stocks and indices are off to another strong start this week with Chinese markets soaring on the news of more reforms that was released on Friday including interest rate liberalization, accelerating the timetable to make the Yuan more freely tradeable, easing the one child policy and additional moves for boosting private investment. Positive sentiment has carried through to trading in Europe and North America this morning. While November has historically been a strong month for stocks anyway, dovish indications from the Fed last week, particularly Chair nominee Janet Yellen suggest QE may be around for a while yet. The potential for delayed tapering has sent USD lower again, confirming the downswing that started last week remains underway. Resource currencies have been rallying on the news particularly the China sensitive AUD and NZD but with CAD and SEK also posting gains. GBP is trading flat as it consolidates last week’s gains. Gold and commodities, however, have not responded to any of this news. With inflation low, and political plus financial risks relatively contained (at least in terms of apocalypse level scenarios), precious metals value as a haven for capital has diminished. Meanwhile, commodities remind us that while stocks have been boosted by money coming into the system from central banks, assets that reflect underlying supply and demand remain mixed. Later this week flash PMI reports are due that traders may look to for signs that the global economy is accelerating in areas beyond known hotspots like the US and UK. Economic News Significant economic announcements released yesterday afternoon and overnight include: There were no major announcements over the weekend. Economic reports due later today include: 10:00 am EST US NAHB housing market index street 55

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