Royalmaxbrokers: China Stimulates Its Economy

RoyalMaxBrokers notes that on Friday the risky assets markets showed a decline once again, despite the fact that many players fixed short positions before the weekend. Major European stock indexes lost from 0.1% to 1.3%, the US S & P500 and Dow Jones fell by 0.7% and 0.6% respectively.

EUR / USD fell to a low of 1.2639 on Friday, to 1.5731 on the pair GBP / USD, and the Japanese yen strengthened to 78.98 on the pair USD / JPY.

RoyalMaxBrokers highlights the fact that, nevertheless, after the G-8 leaders held at the weekend, some reasons for optimism appeared on the markets. To a large extent, the topic of the summit was the situation in the euro area. All G-8 countries called on Greece to stay in the euro area, while respecting its obligations. In many ways, the further development of the situation will depend on the next EU summit, which will be held on Wednesday 23 May. As for Greece, public opinion polls in the country show that parties that are in favor of and against the terms of EU anti-crisis aid enjoy approximately equal support from voters. According to RoyalMaxBrokers , Spain is no less important problem for the euro area, the authorities of which were forced to reconsider the data on the budget deficit for 2011, while the cost of borrowing for it again approached the dangerous levels (above 6% per annum for 10- Year bonds).

According to RoyalMaxBrokers , one of the main economic news of this weekend were statements by Chinese Prime Minister Wen Jiabao that the Chinese government intends to use all the basic instruments of fiscal and monetary policy to stimulate high rates of economic growth. Mr. Venya's comments on the opening of foreign exchange markets and Asian stock markets have already provoked a wave of buying risks on expectations that China will continue to soften monetary policy, which should be favorable for all its trading partners.

RoyalMaxBrokers believes that in this way, the expectations from the upcoming EU summit and the statements of the Chinese prime minister created the ground for the long-awaited rebound. EUR / USD rushed to the level of 1.2800, the pound weighed to 1.5825, and the yen weakened to 79.20 over the pair USD / JPY. Futures for European and US stock indices are also in the green zone, while the Japanese Nikkei225 adds 0.4% as of 9:20 (Moscow time).

According to RoyalMaxBrokers, the leaders of Germany and France will meet today to discuss the most important economic issues ahead of the EU summit on May 23, while German Finance Minister Wolfgang Schaeuble will meet his new French counterpart Pierre Moscovici.

Gold quotations rose for the third day in a row, showing better dynamics compared to stock assets and other commodities that were falling at the time, ahead of the meeting of German and French leaders today, and against the backdrop of Chinese authorities' statements about the intention to focus on stimulating growth. Following the gold are also rising quotations of platinum and palladium.

Gold prices in the spot market rose 0.3% to $ 1,598.25 / oz, which is the highest level since May 10, as of 11:00 Singapore time. At the end of the week, the value of gold rose by 0.9%, which was the first week of growth of the last three.

Nevertheless, it is still too early to talk about the demolition of a downtrend in the gold market. The situation will become clear if quotes can break through and consolidate above the psychologically important level of $ 1600 / oz.

Oil futures rose for the first time in 7 days after Goldman Sachs Inc. Said that "the balance between supply and demand for oil is shifting, while the Chinese government intends to stimulate the national economy." Futures rose 0.6% after falling to almost 7-month lows on May 18. The continuation of the fall in oil quotations is by no means guaranteed, according to Goldman Sachs.

Yesterday, Premier Wen Jiabao of China announced that the Chinese government will focus on measures to maintain high rates of economic growth. Prior to this statement, oil prices fell against the backdrop of an increase in production of "black gold" in Saudi Arabia in March rose to a maximum in the last 30 years.

June futures for light sweet crude rose $ 0.56 to $ 92.04 / barrel on the NYMEX and were at $ 91.84 / bbl at 1:40 in Sydney time. Futures fell to 91.48 $ / barrel on May 18, which is the lowest level since October 26, 2011. June futures for Brent crude rose 0.6% to $ 107.80 / bbl at the London ICE.