The stock market and the dollar declined amid decisions by the PBC on the credit limitation and Janet Yellen’s comments

April 6, 2021

by JustForex

On Tuesday, most Asian stocks fell amid expectations of credit limitation in China. Treasuries, gold, and the Japanese yen increased in value, while the dollar fell. The Asia-Pacific stock index fell for the first time in four days, and the largest losses are incurred by the Japanese indices. S&P 500 stock futures decreased a bit, while the European contracts demonstrated growth.

In China, the central bank has advised the country’s major creditors to limit credit growth by the end of this year to about the same level as last year, if not lower. According to official figures, Chinese banks issued ¥4.9 trillion of new credits in the first two months, which is 16% more than last year.

According to Ken Chen, an analyst at KGI Securities in Shanghai, the credit limitation will drain the liquidity of the stock market and put significant pressure on some sectors. Kweichow Moutai Co., a Chinese liquor maker, fell the most among blue-chip stocks on Tuesday. WuXi AppTec Co. stocks decreased by 5.4%.

In the US, the macroeconomic data continues to point to rapid recovery as more Americans are vaccinated against the coronavirus, restrictions are in the process of cancellation and tax breaks are taking effect. In March, the service sector in the US demonstrated the fastest growth on record as orders jumped to new heights. The PMI of this sector was 63.7 against 55.3 last month according to the ISM Institute data.


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Despite the positive data, Treasury Secretary Janet Yellen reiterated her point of view that the $1.9 trillion US pandemic response bill signed last month would not cause inflationary pressures and suggested that interest rates would remain low for years to come. Against this background, the 2-year bonds yield decreased sharply from 0.19% to 0.16%. Treasury yields were below 1.70% again.

Main market quotes:

S&P 500 (F) 4,056.62 -11.13 (-0.27%)

Dow Jones 33,527.19 +373.98 (+1.13%)

DAX 15,281.00 +173.83 (+1.15%)

FTSE 100 6,817.95 +80.65 (+1.20%)

USD Index 92.705 +0.110 (+0.12%)

Important events:
  • – RBA Interest Rate Decision (Apr) at 07:30 (GMT+3);
  • – JOLTS Job Openings (Feb) at 17:00 (GMT+3).

by JustForex

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.