BEIJING, Oct 19 (Reuters) - China's central bank surprised on Tuesday with its first increase of interest rates in nearly three years, a move that reflects concern about resurgent asset prices and could mark the start of a more aggressive phase of monetary tightening in the world's fastest-growing major economy.
The People's Bank of China said it was raising benchmark rates by 25 basis points, taking one-year deposit rates to 2.5 percent and one-year lending rates to 5.56 percent.
If there was ever any doubt about China's role in driving the stuttering global economic recovery, the impact was felt by markets across the board. Oil and gold prices tumbled, stocks turned negative in Europe and the dollar jumped.
Wednesday, October 20, 2010
Trader's Highlight
DJI-NEW YORK, Oct 19 (Reuters) - U.S. stocks posted their biggest loss in two months on Tuesday on fears banks might be on the hook for billions of dollars in souring mortgage bonds.
The afternoon selloff hit investors already reeling from an unexpected credit tightening by China and disappointing financial results from Apple and IBM .
The biggest scare came on news that Bank of America and possibly others may be forced to take back billions of dollars in mortgages that should not have been bundled into bonds.
The Dow Jones industrial average <.DJI> dropped 165.07 points, or 1.48 percent, to 10,978.62. The Standard & Poor's 500 Index <.SPX> lost 18.81 points, or 1.59 percent, to 1,165.90. The Nasdaq Composite Index <.IXIC> fell 43.71 points, or 1.76 percent, to 2,436.95.
NYMEX-NEW YORK, Oct 19 (Reuters) - U.S. crude oil futures ended more than 4 percent lower on Tuesday, suffering the biggest one-day percentage loss in more than eight months, as the dollar strengthened on safe-haven buying following a surprise interest rate increase in China.
Investors fear the move could dampen Chinese and global growth and slow the country's voracious demand for oil and other commodities.
Crude futures fell back after rising more than 2 percent on Monday, lifted by higher refined products futures as strikes in France continued to affect fuel production and oil shipping.
On the New York Mercantile Exchange, November crude settled at $79.49 a barrel, falling $3.59, or 4.32 percent. The November contract expires on Wednesday.
CBOT-CHICAGO, Oct 19 (Reuters) - Chicago Board of Trade grain and soy complex close on Tuesday.
CBOT-SOYBEANS - November down 4 cents at $11.80 per bushel; January down 3-1/2 at $11.91-1/2. Hit by soaring dollar, lower crude oil and stock market in addition to weight from active harvest of a likely record large U.S. soybean crop.
CBOT-SOYOIL - December down 0.56 cent at 47.10 cents per lb. Losing ground to soymeal on meal/oil spreads; declines in crude oil add pressure.
FCPO-KUALA LUMPUR, Oct 19 (Reuters) - Malaysian palm oil rose on Tuesday along with other vegetable oil markets, although a firmer U.S. dollar and concerns of growing stocks weighed on prices.
Palm oil has rallied in the past week and come within striking distance of the 3,000 ringgit level after the U.S. government cut its soybean crop forecast and the dollar weakened. That rally may have been overdone, traders said.
Technicals are not very promising either. A Reuters analysis showed palm oil is likely to trade at 2,849 ringgit per tonne.
Malaysia's benchmark January palm oil futures climbed more than 1 percent to trade at 2,919 Malaysian ringgit ($944.6). Traded volume rose to 18,175 lots of 25 tonnes each from the usual 10,000 lots.
REGIONAL EQUITIES-BANGKOK, Oct 19 (Reuters) - Most Southeast Asian stock markets rose on Tuesday as investors bought into growing sectors but the region saw some foreign money flow out despite the prospect of further U.S. monetary easing.
With the results season for Southeast Asian firms beginning, Thailand <.SETI> clawed back from a one-week low on Monday thanks to buying in banks, while the indexes of Singapore <.FTSTI>, Malaysia <.KLSE> and Indonesia <.JKSE> eked out small gains.
Despite the gain, Jakarta recorded $147.7 million in outflows on the day, the biggest this year, according to Thomson Reuters data.
In Singapore, medium-caps led gainers, with casino operator Genting Singapore Plc rising 2.4 percent, while in Malaysia financial firm RHB Capital Bhd jumped 2.3 percent.
The afternoon selloff hit investors already reeling from an unexpected credit tightening by China and disappointing financial results from Apple
The biggest scare came on news that Bank of America
The Dow Jones industrial average <.DJI> dropped 165.07 points, or 1.48 percent, to 10,978.62. The Standard & Poor's 500 Index <.SPX> lost 18.81 points, or 1.59 percent, to 1,165.90. The Nasdaq Composite Index <.IXIC> fell 43.71 points, or 1.76 percent, to 2,436.95.
NYMEX-NEW YORK, Oct 19 (Reuters) - U.S. crude oil futures ended more than 4 percent lower on Tuesday, suffering the biggest one-day percentage loss in more than eight months, as the dollar strengthened on safe-haven buying following a surprise interest rate increase in China.
Investors fear the move could dampen Chinese and global growth and slow the country's voracious demand for oil and other commodities.
Crude futures fell back after rising more than 2 percent on Monday, lifted by higher refined products futures as strikes in France continued to affect fuel production and oil shipping.
On the New York Mercantile Exchange, November crude
CBOT-CHICAGO, Oct 19 (Reuters) - Chicago Board of Trade grain and soy complex close on Tuesday.
CBOT-SOYBEANS - November
CBOT-SOYOIL - December
FCPO-KUALA LUMPUR, Oct 19 (Reuters) - Malaysian palm oil rose on Tuesday along with other vegetable oil markets, although a firmer U.S. dollar and concerns of growing stocks weighed on prices.
Palm oil has rallied in the past week and come within striking distance of the 3,000 ringgit level after the U.S. government cut its soybean crop forecast and the dollar weakened. That rally may have been overdone, traders said.
Technicals are not very promising either. A Reuters analysis showed palm oil is likely to trade at 2,849 ringgit per tonne.
Malaysia's benchmark January palm oil futures
REGIONAL EQUITIES-BANGKOK, Oct 19 (Reuters) - Most Southeast Asian stock markets rose on Tuesday as investors bought into growing sectors but the region saw some foreign money flow out despite the prospect of further U.S. monetary easing.
With the results season for Southeast Asian firms beginning, Thailand <.SETI> clawed back from a one-week low on Monday thanks to buying in banks, while the indexes of Singapore <.FTSTI>, Malaysia <.KLSE> and Indonesia <.JKSE> eked out small gains.
Despite the gain, Jakarta recorded $147.7 million in outflows on the day, the biggest this year, according to Thomson Reuters data.
In Singapore, medium-caps led gainers, with casino operator Genting Singapore Plc
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