China Cuts Benchmark Rate Amid Weaknening Growth Prospects; Markets React (FXI)
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Markets are active early Friday following news that China has cut its lending rate for the first time in two years, signalling that recent efforts to bolster its ebbing growth trajectory have failed to take hold.
The People's Bank of China (PBOC) said it cut its benchmark one-year loan rate by 0.4 points to 5.6 percent. The last cut was n July 2012.
The PBOC also trimmed its one-year deposit rate by 0.25 points to 2.75 percent. Banks were also given more flexibility in setting deposit rates.
Market speculation pegs China missing its annual growth rate of 7.5 percent for 2014. Year-over-year growth was at 7.3 percent in Q314, while segments like factory output, investment, retail sales, and export have all shown signs of slowing.
U.S. indexes are indicated higher early. Dow futures are up 111 points, S&P 500 futures are up 13 and Nasdaq futures are up 29. With the U.S. fed stepping back on easing measures, investors are happy to see other central banks take the reins.
The iShares FTSE/Xinhua China 25 Index (NYSE: FXI) will be in focus Friday.
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