• Add
    Company

Italian equities defy rating cut; Chinese stocks surge

Swissquote Bank

Italian equities rise despite rating cut

By Arnaud Masset

On Monday morning Italian equities surged, with financials rising the most while treasury yields fell to a 1-month low. Last Friday, Moody’s Investors Service cut the country’s credit rating to Baa3, one notch above junk, amid concerns over Italy’s eroding fiscal strength. However, because the statement’s tone remained positive and EU’s Commissioner for Economic and Financial Affairs, Pierre Moscivici, made supportive comments, the sell-off was limited. In addition, Italian Deputy Prime Minister Luigi Di Maio said that his government was open to negotiations with the European Union.

The 2-year BTP-Bund spread eased to 1.72%, down from 2.14% last Thursday.

In the FX market, EUR/USD rose 0.30% to 1.1550 before returning to 1.1530, which suggests that investors remain on their guard. Overall, risk sentiment has improved but investors’ confidence remains fragile following two rough weeks, which have seen equity valuations melt like snow in the sun.

Chinese stocks gain despite slowing economy

By Vincent-Frédéric Mivelaz

China’s Q3 GDP growth published last Friday at 6.50%, the lowest since 2009. Still, the Shanghai CSI 300 had its largest intraday gain since January 2015, 4.32%, and the Hong Kong Hang Seng rose 2.35%, marking its largest rise since mid-September 2018. The bounce is welcome, since Chinese shares have been declining since the beginning of the year (CSI 300: -22.23%, Hang Seng: -12.50%) amid mounting trade tensions between China and the US and worries of emerging market debt.

Chinese authorities remain worried about the economy. Supportive policies (including flexible credit granting) and tax cuts estimated at 1% of GDP starting next year have been confirmed. For now, the focus remains on Trump–Xi talks at the upcoming G20, which was recently confirmed by both parties. Any outcome could have a strong impact on the Renminbi. China’s central bank is expected to keep USD/CNY at 7. Today’s fixing remains at 6.9236.

Swissquote Bank Review

Source: https://en.swissquote.com/
Disclaimer
!"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|} !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}