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BW Businessworld

China Plans Send World Markets Higher, Gold Pauses

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World shares pushed up towards five-year highs on Tuesday, 23 July helped by China's plans for avoiding a hard landing in its slowing economy, while gold took a breather after its biggest one-day gain in more than a year.
 
Local media in China reported that the government is looking to increase investment in railway projects as it aims to ensure annual economic growth does not sink below 7 per cent.
 
The reports saw China shares post their best day in two weeks, driving MSCI's broadest index of Asia-Pacific shares outside Japan up 1.3 per cent to its highest since early June.
 
In India, the BSE Sensex was up 0.76 per cent after hitting its highest intraday level in two months, while the Nifty gained 0.8 per cent. The Reserve Bank of India's move to tighten gold imports again on 22 July with an eye to cut a record current-account deficit is seen as a broader positive for equities, dealers say.

Consumer goods companies continued to make record highs as funds opt for traditionally defensive stocks in an uncertain environment underscored by the rupee's volatility.

European Shares Up
European shares added to their recent gains on hopes that China's plan would boost demand for construction materials, climbing 0.4 per cent in early trade with the focus expected to switch to corporate earnings reports.
 
"Earnings have also been relatively good so far, although the bulk of results still has to come. We'll have a better idea of the big picture by the end of the week," said David Thebault, head of quantitative sales trading at Global Equities.
 
An upgraded economic outlook from Japan's government added to the better tone in the markets, lifting Tokyo's Nikkei 0.8 per cent, sending the MSCI world equity index up 0.2 per cent to within touching distance of the five-year high hit at the end of May.
 
Expectations Japan will stick with its expansionary policies after the government's victory in weekend elections also supported the yen, which hit a one-week peak against the dollar at 99.13 yen before settling back to 99.51 yen.
 
The greenback has been softer against many major currencies, giving an extra shine to gold, as concerns of an imminent reduction in the Federal Reserve's bond-buying stimulus ease.
 
Gold eased off from its recent gains, up just 0.1 per cent to $1,336.84 an ounce. The precious metal has now recovered nearly $160 from a three-year low of $1,180.71 an ounce hit on June 28th.
 
In emerging markets, traders were watching Turkey, where the central bank will decide whether to raise interest rates to shore up the lira after burning through its foreign exchange reserves in a desperate bid to shore up the currency.

(Reuters)