Today's financial news

TUESDAY 15th Aug

<- Back to news

As Russia hikes interest rates, China's "confidence crisis" has prompted rate cuts

Play audio

Russian central bank raises interest rates

The Russian has hiked interest rates to 12% after currency fell on Monday (yesterday) to the lowest level in 16 months. With dollar now costing more than 100 roubles, this prompted the Russian central bank to hold an urgent meeting, where they decided to raise the key interest rate in the country by as much as 3.5 percentage points from the previous 8.5%.

US investors predict stock market drops

Renowned American investor Michael Burry, known to have predicted the financial crisis, has made a big bearish bet on stock markets. Burry's hedge fund, Scion Asset Management, has firmly shown that it lacks confidence in the US economy. Waging a more bearish attitude, his firm, which owns put options against an ETF that follows the broad stock index S&P 500, has put $1.6 billion to work betting against the stock market. This has spooked American investors who know that when you buy put options, you think there is a risk of a price drop.

China issues rate cuts during “confidence crisis”

China’s central bank unexpectedly cut rates on Tuesday, from 2.65% to 2.5%. It was the second rate cut in three months. The move comes in the midst of China’s “confidence crisis”, as policymakers continue to ramp up support for its struggling economy. This all follows China’s alarming July data. This data revealed that industrial output rose by 3.7% in July from a year ago, below the 4.4% increase analysts had expected, while retail sales also rose at a slower pace by 2.5% last month.

Sources: CNBC, Financial Times

Maria Collinge