Market Drivers – European Session 22/8/2022

The People’s Bank of China lowered the one-year base loan rate by 5 basis points to 3.65% at the central bank’s monthly fix on Monday, while the five-year base loan rate was lowered by 15 basis points to 4.30%.

This came on the heels of last week’s surprising decision to cut two other benchmark interest rates.

While China’s economy, the world’s second largest, narrowly avoided contraction in the second quarter, widespread COVID-19 lockdowns and the real estate crisis are weighing on consumer and business confidence.

Last week, Goldman Sachs cut its full-year GDP growth forecast for China to 3.0% from 3.3% previously, well below Beijing’s official target of around 5.5%.

US stock markets are set to open sharply lower on Monday, with investors nervous ahead of the Federal Reserve’s eagerly awaited Jackson Hole economic seminar.

By 06:00 ET (10:00 GMT), Dow futures were down 300 points, or 0.9%, S&P 500 futures were down 1.2%, and Nasdaq 100 futures were down 1.5%.

Oil prices fell on Monday due to reports that a deal to revive the nuclear deal between Iran and Western powers is imminent.

And the Qatari news channel Al-Jazeera reported, at the weekend, that such a deal was “imminent,” while the White House confirmed that the leaders of the United States, Britain, France and Germany discussed the plans at the end of the week.

These fraught negotiations have lasted more than a year, and the market may be on its way forward, especially after an Iranian Foreign Ministry spokesman on Monday accused the United States of “stalking.”

However, the deal could release more than 1 million barrels of oil per day into the market if sanctions on Iranian oil are lifted.