Market Overview

22 August 2019 08:20

Maria Gregoriou

The Federal Reserve (Fed) released the minutes of the meeting it had three weeks ago yesterday, during which it was decided that interest rates would be cut. The main three reasons for the cut, as stated in the minutes, were the slowdown in growth – particularly in business, investment and manufacturing, which is likely linked to the ongoing trade war – risk management and that uncertainly remains elevated, and the three reasons were sited as inflation, which is still running below the Fed’s two percent goal.
21 August 2019 08:23

Maria Gregoriou

After economists at Barclays PLC looked over their outlook for central bank rates and growth across major economies, their latest forecast is that the Federal Reserve (Fed) may go ahead with three further quarter-point cuts this year. According to Bloomberg, this revision was made due to the heightened forecast that will be a “non-negotiated exit by Britain from the European Union, resulting in a mild recession in that country next year and two interest-rate cuts by the Bank of England, one this year and one in 2020.” The economists also revised their euro-zone growth and reduced it to 0.
20 August 2019 08:05

Maria Gregoriou

U.K. Prime Minister Boris Johnson announced to the European Union that he is keen to look into different ways to “prevent a hard border on the island of Ireland”, according to Bloomberg. In this first public attempt to renegotiation a Brexit deal, Johnson sent a letter to the European Council President Donald Tusk, stating that he wants to replace the backstop provision - which is one issue that Johnson said he will not consider in the negotiations in his pre-election debate – with a “legally binding commitment.
19 August 2019 07:12

Maria Gregoriou

On Saturday, a drone attack on Saudi Arabia by Yemen’s Houthi rebels caused a fire to erupt in a Saudi oil and gas field. This morning we are seeing the results of this attack on crude oil prices, which have seen a rise. According to Euronews “brent crude <LCOc1> was up 45 cents, or 0.8 percent, at $59.09 a barrel at 0035 GMT, and U.S crude <CLc1> was up 39 cents, or 0.7 percent, at $55.26 a barrel.
9 August 2019 07:04

Maria Gregoriou

The National Bureau of Statistics (NBS) of China released the Consumer Price Index (CPI) for July this morning, showing that the index is up 2.8 percent – the highest reading since February last year. The index, which is a key indicator to measure inflation and changes in purchasing trends, showed that food prices grew 9.1 percent year on year last month, which was an increase from 8.3 percent in June. The bureau also released the Producer Price Index (PPI), which showed a fall to minus 0.3 percent in July compared to a year ago and a decrease from the flat reading in June.
8 August 2019 07:37

Maria Gregoriou

As the trade war rages on between the two strongest economies in the world, China and the U.S, China’s strategy is to continue to weaken its currency. The central bank of China set the midpoint of the renminbi’s (as known as the Yuan) daily trading above seven to the American Dollar for the first time in more than a decade yesterday, according to The New York Times. This decision suggests that the currency may weaken further, an act that may assist Chinese factories ‘offset the higher costs of Mr. Trump’s tariffs when selling their goods to the United States,’ the newspaper said.
7 August 2019 06:53

Maria Gregoriou

The Reserve Bank of New Zeeland’s (RBZN) Monetary Policy Committee announced today that the Official Cash Rate will be reduced to 1.0 percent. This decision was made because the committee believes it is a necessity for future employment and inflation objectives to be met. Zooming in on these two factors, the official report from the RBZN states that employment is around its maximum sustainable level at the moment, while inflation remains within the bank’s target range, but below the two percent mid-point.
6 August 2019 12:11

Maria Gregoriou

In a meeting today, the Reserve Bank of Australia (RBA) Board decided to leave the cash rate stable at 1.00 percent. In a statement announcing the fact, Philip Lowe, the Governor of RBA stated that “the increased uncertainty generated by the trade and technology disputes is affecting investment and means that the risks to the global economy remain tilted to the downside.” Referring more specifically to Australia, the Governor said that growth has been lower than expected in the first half of the year, but it is expected to pick-up in the second half.
5 August 2019 07:39

Maria Gregoriou

The big news at the end of last week was that U.S President Donald Trump announced that he would impose a ten percent tariff on a further $300 billion in Chinese imports. China has now hit back by allowing the Yuan to fall to the weakest level in more than a decade this morning and asking state-owned companies to suspend imports of U.S agricultural products, according to Bloomberg. In an interview this morning, journalist for Bloomberg Anna Kitanaka said “this is a significant move in terms of how symbolic this is because China has already been decreasing its purchases of U.
2 August 2019 09:39

Maria Gregoriou

U.S President Donald Trump surprised the world economy as a whole yesterday as he announced that he would impose a ten percent tariff on a further $300 billion in Chinese imports. This could only be the beginning as the new import taxes could go “well beyond 25 percent” Trump said. The trade war was thought to be winding down a little lately as talks had started up again after President Trump and Chinese President Xi Jinping had spoken in Osaka a few weeks ago. Then the two leaders agreed they would leave tariffs as they were for as long as they were talking.
Market Focus
  • German economy continues to underperform in August - IHS Markit
  • Gaps remain with U.S. on trade after 'very tough' talks - Japanese Economy Minister
  • FOMC meeting minutes showed the central bank intends to remain flexible regarding future changes to interest rates.
  • IMF: currency devaluations due to policy easing cannot improve trade balance

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