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Asian Markets Fall Amid Concerns Over Effectiveness Of Central Bank Stimulus

Overnight Asian markets fell as investors showed concern over central bank stimulus from the EU, Asia and the US, will not be enough to increase global growth. Benchmark indices across Asia fell with the MSCI Asia Pacific Index down around 1.5%. The Chinese economy has fuelled global demand through imports of raw materials for development and exports of cheap goods from low cost labour. Analysts are concerned that a Chinese hard landing could be the sucker punch to global growth over the next few years. Though it is important to take note that the Chinas growth is still at impressive levels, and enviable to all in the western world.

The EURCHF peg has been the recurring dilemma for many FX traders for the last year. The SNB has vowed to defend the peg with all its might, and rumours seem to circulate on a monthly basis of a raise of the peg to 1.22 or as high as 1.25. However a piece in this morning’s UK Telegraph details a report by Standard & poor’s that the SNB have had to pump vast capital flows into safe-haven bonds such as German Bunds. This is to counter the flood of money entering the country and protect the peg, which has exacerbated the Eurozone’s “North-South” yield divide. Full article can be found here.

The interbanking lending rate Libor rose to fame among the public a few months ago, after a regulatory investigation detailed its manipulation. In June Barclays held their hands up and were fined £290m, forcing senior figures, including the Chief Exec Bob Diamond to resign. It is thought that many of the leading institutions involved  in the setting of Libor also partook in its manipulation. Investigations are continuing without financial regulatory bodies involved, however the British Bankers Association (BBA) announced yesterday that they would no long be running the rate setting. 

Headlines

RBS trader Tan Chi Min told colleagues the firm was able to move global interest rates, according to instant messages - Bloomberg

Bank of America plan about 40 job cuts at Asia Global markets unit – Bloomberg

UBS Kweku Adoboli trial: Colleagues new about "fictitious" trades, but didn't know the extent and were said to be unhappy about it – Bloomberg

S&P have lowered South Australia to AA from AA+; outlook stable

Italian Prime Minister Mario Monti says that he won't run for next elections

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