China Stimulus Announcement Met With Indiference

Worrying economic data out of China had raised expectations in recent weeks that Beijing would respond with stimulus measures in an effort to stabilize growth.
The State Council obliged late Wednesday, announcing a slate of new measures including railway and urban redevelopment projects, along with a tax break for small businesses.
Market reaction on Thursday was muted. After an initial boost, the Shanghai Composite ended the day in negative territory. Hong Kong’s Hang Seng was little changed.
There are a few likely explanations for the collective shrug from investors.
The new package is relatively small compared to many of Beijing’s previous stimulus efforts. In response to the 2008 financial crisis, for example, China pumped almost $600 billion into the economy.
In addition, markets have likely priced in much of the stimulus impact. Railway projects are an old standby for Beijing, and something investors would have anticipated.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza