Commodity Stocks Rally After Shanghai Bounce
Last night, the important Shanghai Index rallied higher by 1.59 percent. This rally in the Chinese market comes despite the Chinese central bank increasing the benchmark interest rate by 25 basis points on February 9th, 2011. This rate increase was put in place to fight the high inflation that the country is experiencing. Historically, whenever a central bank has raised interest rates the economy usually slows down.
Traders and investors are now following the important Shanghai Index very closely. When the Shanghai Index rallies sharply higher most leading commodity stocks will catch a bid higher. This morning that is very evident as leading commodity stocks such as Cliffs Natural Resources Inc.(NYSE:CLF), and United States Steel Corp.(NYSE:X) are trading higher.
Many leading energy stocks are also strong this morning after China's national energy company PetroChina just took a stake in a Western Canadian gas field for $5.4 billion. Recently, China took a large position in Chesapeake Energy Corp.(NYSE:CHK) in the United States. Therefore, many energy companies are catching a bid higher as the Chinese government continues to invest in North American energy companies.