Michael Pascoe writes:

As reliable as AWB cables not being read,
the world’s stock markets are taking the good news of a Chinese interest rate
rise
the wrong way by selling down resources stocks.

It’s happened before and no doubt will
happen again as the punters are misled by the noise and fail to look through to
the fundamentals. A bigger threat to the resources boom would be China NOT
lifting rates a little as Beijing makes good on its promise to look for sustainable growth, rather
wait for a bubble to burst.

To save buying a newspaper tomorrow
morning, dig out any old copies from October 29 or 30, 2004, and read that
instead – it’s pretty much the same news. Resources stocks took a tumble then
too when China lifted rates, only to bounce back in time as the fundamental
strength of the Chinese growth story overcame the knee-jerk reaction.

Our market has been looking for an excuse for
a correction and this might be it – which the smart money will see as a buying
opportunity, just as it did the last time China
moved rates.

The US Treasury reaction has been unusually
lucid this time round, applauding the rise as a good thing, according to
Reuters. But, Washington being Washington, it
couldn’t let the opportunity pass for another dig at the Chinese exchange
rate.

A change in sentiment about Chinese demand
might also be a plus by taking some of
the wind out of the oil speculators’ sails – a key factor in oil running around
US$70 instead of US$50 to $60.

Meanwhile the US Federal Reserve is hinting
it might be time for a break from lifting its interest rates. Maybe the latest oil price surge isn’t as big
a concern there as it is with the economic chorus here.