Down again on Thursday, mainland Chinese stocks have now underperformed the wider MSCI all-country index by some 8% this year.
With the PBOC guiding the onshore yuan lower at its daily fixing, concern is growing that currency weakness is preventing it from easing monetary policy to address the ongoing housing bust.
And it also comes in tandem with fresh weakness in Japan’s yen, which hit its lowest since the Bank of Japan intervention in April despite warnings of repeat action.
Putting the French political upheaval aside for the time being, European stocks were higher – helped by the latest interest rate cut on the continent.
The Swiss National Bank cut its main policy rate on Thursday for the second time this year, maintaining the central bank’s position as a frontrunner in the global policy easing cycle and sending the Swiss franc lower and Swiss stocks higher.
The latest quarter point cut to 1.25% has been almost 70% priced by money markets in advance and another quarter point easing is expected by yearend.
Norway’s central bank was not for budging, however, and held the line – more worried about spikier inflation there.
Attention now switches to the Bank of England, which announces its latest decision on Thursday too. Not least with July 4’s British election around the corner, the BoE is expected to stand pat for now – with a one-in-three chance of a cut at its next meeting on August 1 now seen in money markets.
