China Adds Mini- Stimulus Package Disappoiting Traders

Asian markets are trading on a positive note today after Chinese government announced stimulus measures to boost economic growth in world’s second largest economy. Statement issued by State Council yesterday after a meeting with Chinese Premier Li Keqiang said that Chinese government will sell 150 billion Yuan ($24 billion) in this year to fund railway building in less developed regions, and policy of preferential tax policy will be extended to more small companies. Most markets are shrugging off the announcement from the Chinese government, as it will have very little aid to exports as most of new projects are aimed at domestic work. China turned to its old standby policy of using government spending to boost economic growth, rolling out a mini-package of stimulus measures on Wednesday to ensure that the government meets its economic targets this year. China’s State Council, or cabinet, unveiled a combination of stepped up spending on railways, upgraded housing for low-income households and tax relief for struggling small businesses, the central government said on its main website Wednesday. The package was announced just as growth appeared to be losing steam. China has set a target of economic growth of about 7.5 per cent for this year, below the 7.7 per cent recorded last year and well beneath the levels of recent years.

The Australia dollar was one of the most active currencies this morning, tumbling 33 points after retail sales missed expectations. Australian retail sales rose for the 10th straight month in February, government data showed, while the country boasted another sizable trade surplus as exports to China grew by almost a third compared to last year. Thursday’s data showed the economy was on track for a solid quarter of growth as low rates and rising household wealth boosted spending, while a decade of furious mining investment fuelled resource exports. Retail sales rose 0.2 percent in February to a record A$22.97 billion ($21.2 billion), a resilient performance given it followed a 1.2 percent surge in January.

The New Zealand dollar had climbed toward record highs earlier this week but declined by 25 points after Chinese data and a much stronger US dollar which climbed on strong ADP jobs data on Wednesday. Ahead of official jobs numbers on Friday, a closely watched private sector jobs report showed 191,000 jobs were added in March, above last month’s 178,000 but below forecasts of 200,000. Analysts are confident Friday’s jobs report will also show improvement in March, with the extent of the improvement to impact market direction.

The Japanese yen moved towards a record low against the US dollar this morning trading at 104.05 up by 17 points after the new consumption tax kicked in. The Japanese Yen traded on a lower note by 0.2 percent in yesterday’s trading session on the back of rise in risk appetite in the market sentiments in later part of the trade that led to fall in demand for the low yielding currency. The yen tumbled against other major currencies in Asian morning deals on Thursday as investor sentiment rose on strong U.S. data and China’s mini stimulus package designed to boost spending on railways and tax relief for struggling small businesses. The U.S. factory orders rebounded more than expected to 1.6 percent in February. The US dollar climbed to a recent high of 80.41 ahead of tomorrow’s NFP release. Market focus is now on the ECB as the euro eased to trade at 1.3769