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China's cap ad call triggers commodities sale

20 January 2010

European markets opened down slightly this morning (Wednesday 20 January) after a weak trading session in the Asian markets.

In China, the ongoing pressures for banks to firm up capital adequacy requirements resulted in two Chinese banks upping their required reserves on the say so of the Central Bank. The Shanghai Composite index dropped by around three per cent as a result.

Nick Serff, market analyst at City Index explained that the move could lead to more widespread activity from the Chinese Central Bank as it attempts to cool an economy that is in danger of overheating.

He explained, ‘Perceived riskier assets such as gold and oil sold off aggressively after the announcement, with investors choosing to buy bonds and the dollar.’

All attention will turn to the earnings announcements from Bank of America at 12 noon, which are expected to be in the region of 53 cents per share.

JP Morgan suggest that these estimates may be a little of the high side. A full update on the impact of Bank of America’s results will follow shortly on What Investment.co.uk.

At 11:45am (London time) the FTSE 100 index was trading down at 5,489.


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