Whether it be their own waning economy or the Greek crisis knocking their domestic stock market, the People’s Bank of China, has again been compelled to provide stimulus.
The central bank injected CNY 50 billion into the market last night leading to an over 10% rally in the Shanghai Composite.
The injection of capital comes a couple of days after the Chinese central bank cut rates by 0.25% to 4.85%
The Chinese authorities have been blowing hot and cold and inciting market volatility as they repeatedly caution on bubbles only to ease if the market falls.
Volatility in Chinese stocks is now at its highest level since 2007.
“There is still too much uncertainty in the markets and investors would be watching developments in Greece and China very carefully before jumping in,” said Karine Hirn, of Swedish group East Capital.
As with yesterday’s trade following the Chinese central bank cut interest rates over the weekend, the FTSE 100 outperformed its European peers due to the high weighting towards commodity stocks such as Rio Tinto (LON:RIO) and Glencore (LON:GLEN).
The prospect of further Chinese easing will increase investors perception of a higher demand for commodities going forward, a potential upside catalyst for mining companies.
The FTSE 100 trades down 1.16% and The DAX down 1.53%
