US stocks rally on energy rally while China funds banks

US  stocks  advanced  as  rising  oil  prices  spurred  a  rally  in  energy  shares  and China’s central bank reportedly started providing about  US$81bn in loans to its biggest banks.  The S&P 500 added 0.8%  to 1,998.98.  The Dow Jones Industrial Average climbed 100.83 points (0.6%) to 17,131.97.

Wholesale prices in US were little changed in August

Wholesale prices in the  US  were little changed in August from the prior month, restrained  by  a  plunge  in  energy  costs  and  a  sign  of  limited  inflation  in  the production  pipeline.  The  producer-price  index  (PPI)  was  unchanged,  matching the median forecast in a Bloomberg survey of economists, after a 0.1% rise in July,  a  Labor  Department  report  showed.  Over  the  past  12  months,  wholesale prices rose 1.8% in August (1.7% in July).

German investor confidence falls to weakest since 2012

German  investor  confidence  dropped  to  the  weakest  in  21  months  amid increasing political tension in Europe, even as the European Central Bank  (ECB) steps up its stimulus. The ZEW Center for European Economic Research  said its index  of  investor  and  analyst  expectations  fell  to  6.9  in  September  from  8.6  in August. That’s lowest level since December 2012. Economists forecast a drop to 5, according to the median of estimates in a Bloomberg News survey.

UK inflation slows to match 5-year low on food prices

The  UK  inflation  rate  fell  to  match  the  lowest  in  five  years  in  August  as  a supermarket price war and weather effects pushed food prices down the most in more than a decade.  The rate of consumer-price growth fell to 1.5%  in August from 1.6%  in July, in line with the median forecast of economists and marking an eighth month below the Bank of England’s 2% target.

China provides US$81.4bn to five banks, Sina says

China  is  providing  500bn  yuan  (US$81.4bn)  of  liquidity  to  the  country’s  five biggest  banks  as  Premier  Li  Keqiang  steps  up  stimulus  to  support  economic growth,  Sina.com  reported.  The  People’s  Bank  of  China  (PBOC)  started providing the banks with 100bn yuan each through standing lending-facilities with tenor of three months. Earlier, the central bank had made two targeted reductions in reserve ratios after instructions from the State Council, China’s cabinet. The first, in April, applied to some  small rural banks and the second, detailed by the PBOC in June, covered most city commercial banks and non-county-level rural commercial banks and cooperatives.

RBA monitors house price risks as rate stability reaffirmed

Australia’s central bank  (RBA) said it will monitor risks from rising property prices as  policy  makers  reiterated  a  period  of  stability  in  record-low  interest  rates. Governor Glenn Stevens has lowered borrowing costs to encourage non-mining businesses to boost spending and take on risk in order to compensate for waning mining investment. He has signaled further rate cuts are unlikely as they would foster a build-up of risk in an economy where the housing industry is booming.

OPEC Secretary-General says group may pump less oil in 2015

The Organization of Petroleum Exporting Countries (OPEC), the group supplying about 40%  of the world’s oil, may cut production next year, its Secretary-General Abdalla  El-Badri  said.  The  OPEC’s  daily  output  target  could  fall  by  500,000 barrels to 29.5mn barrels in 2015, El-Badri said. The group’s monthly report on September  10  showed  demand  for  its  oil  will  drop  to  29.2mn  barrels  a  day  in 2015 from 29.5mn this year.

Oil rises as OPEC Secretary-General says group may cut target

Brent  gained  after  OPEC’s  Secretary  General  said  the  group  may  cut  output targets next  year.  Brent for November settlement increased  US$1.17  (1.2%)  to end the session at US$99.05 a barrel on the ICE Futures Europe exchange.

Source: HwangDBS Research - 17 Sep 2014