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    NKY: in the red in February on 29.02.2016

    Today People’s Bank of China cut reserve requirements for banks by 0.5%. The news was welcomed in the financial markets, as this decision is aimed to support high level of liquidity in the Chinese financial system, which, in its turn, will have a positive effect on the global financial system. It gave support to the stock indices in Asian and European trading sessions, global stock indices and they rebounded from the lows.

    Positive US data released last Friday has strengthened investors’ expectations that the interest rate would be increased. Next FED meeting is on 15-16 March. Although only few market participants believe that interest rate will be raised at the next meeting, further positive US data might increase chances of the interest rate in future.

    By the end of the trading day last Friday the USD significantly rose against the other currencies, while the price of the global stock indices fell. The decline in indices continues at the opening session today.

    Participants of G20 summit, which was held last weekend, have not reached agreement on stabilization of international markets and incentives of economic growth. Most world stock indices are in the red at the end of February. Increasing concerns about slowing down of Chinese economy cause the rise in safe-haven currencies and prevent the rise in the stock indices.

    By the end of today’s session Shanghai Composite has lost 2.9%, Hong Kong’s Hang Seng fell by 1.3%, Japanese index Nikkei Stock Average fell by 1.0% due to the rise in the Yen.

    Safe-haven currencies went up in price; the price of gold rose by 0.8% up to 1230 USD per ounce.

    Since the opening of European session the index Nikkei continued to decline, support received from the measures adopted by Chinese People’s Bank is losing its effect.

    Therefore, global stock indices, including Nikkei Stock Average, will remain under pressure in the medium-term. Safe-haven currencies like gold and Yen will be in demand.

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