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Share Prices Jump As Chinese Economy Gets Better

ChinaWhile worries regarding Greece weakened the Euro further, equity markets improved owing to the steps China had to taken to better its economy.

On Sunday, the central bank in China reduced the amount of money banks are required to reserve in a bid to encourage lending to revive its economy. Last week, there were reports on crackdowns on margin lending in China, which had a negative impact on international equity markets.

Peter Tuz, president of Virginia’s Chase Investment Counsel, said: “It’s primarily a snap-back rally from the very bad day Friday.” He also said that the earnings season appears not as bad as expected although “it could change on a dime this week because this is the busiest earnings week.

While the Euro weakened because of worries that Greece may default on debts, the dollar got stronger. The vice president of the European Central Bank stated on Monday that countries that default on debts need not leave the Euro. Voicing concerns on Greece’s financial problems, he said that the country has considered capital controls.

Late on Friday afternoon, the Euro weakened 0.63% against the dollar and the decline continued throughout the day. On the contrary, the dollar strengthened 0.4% against many major currencies.

While the all-country world index of the MSCI gained by 0.37%, the FTSEurofirst 300 gained by 0.83%. Meanwhile, the S&P 500 gained by 0.92%, Dow Jones gained by 1.17%, and NASDAQ Composite gained by 1.27%. Apple Inc shares shot up by 2.28% and IBM shares jumped to 3.42%. IBM’s Q1 results far exceeded analysts’ expectations, and its shares further jumped by 2.4% during the extended trade session. The S&P 500’s IT component had climbed to 1.79% at closing time.

On Monday, the prices of US Treasuries plummeted while US stocks got stronger. The price of oil jumped following reports of heightened consumption in the US and warnings about attacks on energy plants issued by the Interior Ministry of Saudi Arabia. Reliable market sources say that Genscape, an oil services company, reported that over 900,000 barrels were drawn at Cushing in Oklahoma for US crude from last Tuesday to Friday. A 350,000-barrel build up was reported throughout the week, up to Friday.

The May delivery of US crude was settled at $56.38, way above the $54.84 of the previous session. The settlement for Brent crude remained unchanged at $63.45 per barrel for two days while earlier, it had fallen to $62.10.