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The London equity benchmark is up 1%, after traders welcomed the news that the cost of borrowing for Chinese banks has declined for a fourth day in a row. This is the first four-day drop since February. Last week, when the interbank interest rate spiked it pushed stocks lower, as dealers thought this might lead to a credit crunch. The People’s Bank of China intervened and provided financing for institutions, which brought stability to the banking system. This has given traders confidence to buy back into the equity markets.
Gold mining companies are in the red today, as the underlying metal has fallen to its lowest level since September 2010. African Barrick Gold and Randgold Resources are down 1.7% and 1.5% respectively.
At lunchtime, the US will announce the final reading of first-quarter gross domestic product (GDP). Analysts are expecting it to remain the same as the previous reading, at 2.4%. If the figure comes in below estimates it could boost the equity markets, as this might mean the Fed will decide not to taper its stimulus package.