Asian markets received two pieces of good news: China's aggregate credit data rose above expectations in December, and India's central bank Governor Raghuram Rajan unexpectedly cut rates by a quarter point for the first time since 2013. Disinflation linked to falling oil prices makes it easier to adopt loose monetary measures. The Indian rupee should in theory weaken as the rate cut, but instead it has strengthened, looking at the effect on growth and the feeling that inflation will no longer be an issue.
The Chinese stock market reacted positively to the credit data: 1,69 trillion yuan compared to analysts' expectations for 1,2 trillion, although this expansion is mainly due to a jump in credit provided by the shadow banking system. Even the Nikkei, after yesterday's fall, has recovered. Wall Street's negative reaction to last night's weak retail sales data is exaggerated, as the weakness is mostly due to a good reason – falling gasoline spending.
The euro is stable at around 1,177 and the yen weakened slightly, to 117,8, again against the dollar. Crude oil, after yesterday's sharp rise, lost half a dollar, but still remains at much higher levels ($48/b) than on Wednesday morning. The differential with Brent has practically disappeared. Gold is stable at 1230 $/ounce. Futures on Wall Street were positive (0,4%).
