Chinese Markets Down 7.6%, US Markets Up 2.0%

Overnight, China's main stock index fell 7.6%after an 8.5% fall on Monday, bringing it down more than 20% over four trading days.

After Chinese markets closed, China's central bank, The People's Bank of China, cut interest rates. The one-year lending rate will drop by 25 basis points to 4.6 percent effective Wednesday, the bank said on its websitey, while the one-year deposit rate will fall a quarter of a percentage point to 1.75 percent. The required reserve ratio will be lowered by 50 basis points for all banks to cover funding gaps, it said.

This is likely the catalyst behind  the U.S. stock rally. The Dow Industrial Average is now up 325 points, or 2.05%.

For detailed analysis of what to expect next see the EPJ Daily Alert.

 -RW