Saturday, 19 October 2019

Markets fall, China's economy slows

Markets fell on Friday.

The S&P 500 fell 0.4 percent, the STOXX Europe 600 fell 0.3 percent and the Shanghai Composite tumbled 1.3 percent.

China reported that its economy grew 6.0 percent in the third quarter from a year ago, down from a 6.2 percent pace in the second quarter.

“Unchecked, the US-China trade conflict is set to sink growth well below 6%,” Mizuho Bank’s Vishnu Varathan, head of economics and strategy, wrote in a note.

Friday, 18 October 2019

Markets mixed amid renewed Brexit deal hope

Markets were mixed on Thursday.

The S&P 500 rose 0.3 percent, the STOXX Europe 600 dipped 0.1 percent and the Shanghai Composite fell 0.1 percent.

European stocks made early gains on the back of an announcement that the European Union and Britain had clinched a deal on the terms of Britain’s exit from the bloc but eventually closed lower.

“Unfortunately, it is too early,” said Michael Bell, Global Market Strategist at JP Morgan.

“It remains to be seen whether the reaction is short-lived as the politicians go toe-to-toe again at the weekend,” said Richard Hunter, head of markets at Interactive Investor.

Thursday, 17 October 2019

US stocks fall amid falling retail sales and overvaluation

Markets were mixed on Wednesday.

The S&P 500 fell 0.2 percent and the STOXX Europe 600 dipped 0.1 percent.

Earlier in Asia, the Shanghai Composite fell 0.4 percent but the Nikkei 225 jumped 1.2 percent.

A report showing a 0.3 percent fall in US retail sales in September raised concerns of a slowdown in consumer spending.

The report pushed the probability of an October interest rate cut by the Federal Reserve up to 90.3 percent from 73.8 percent on Tuesday, based on CME Group data.

Interest rate cuts may be all that is keeping some markets up, according to the International Monetary Fund.

“Equity markets appear to be overvalued in Japan and the United States,” the IMF said in its latest Global Financial Stability report released on Wednesday.

“Declines in interest rates have further motivated investors to search for yield by increasing duration and credit exposures, a development that has boosted asset valuations,” it suggested.

It warned that the search for yield is also “creating an environment conducive to a buildup of vulnerabilities”.

Wednesday, 16 October 2019

Markets rise on hopes for Brexit deal

Markets were mostly higher on Tuesday.

The S&P 500 rose 1.0 percent, the STOXX Europe 600 jumped 1.1 percent and the Nikkei 225 surged 1.9 percent.

Investors were cheered on Tuesday by a report that an agreement over the UK's exit from the European Union is close.

“One by one the major global risks to U.S. economic growth are falling by the wayside which gives investors the green light to back up the truck and buy lots of stocks,” said MUFG chief economist Chris Rupkey.

John Lynch, chief investment strategist at LPL Financial, said that “better days lie ahead”. He said that the US-China trade war “is unlikely to be resolved anytime soon, but we believe any small steps forward could increase business confidence and spark capital investment, lifting corporate profits”.

Tuesday, 15 October 2019

Markets mixed amid concern optimism on US-China trade deal is “premature”

Markets were mixed on Monday.

The S&P 500 dipped 0.1 percent and the STOXX Europe 600 fell 0.5 percent but the Shanghai Composite rose 1.2 percent.

Markets gave up some of the gains made after an announcement on Friday that the US and China had reached a partial agreement on trade.

“There was concern optimism might be premature,” said John Carey, a portfolio manager and director of US equity income at Amundi Pioneer Asset Management.

Nevertheless, JP Morgan analyst David Kelly suggested that “the fact that the negotiators were so anxious to announce a deal suggests that both sides now appreciate the damage being done to their economies by the conflict” and “probably reduces the risk of a re-escalation of the war in the months ahead”.

Indeed, Chinese customs data released on Monday showed that in US dollar terms, Chinese exports fell 3.2 percent in September from the previous year while imports declined 8.5 percent.

Monday, 14 October 2019

US-China trade deal “looks more like a truce”

US President Donald Trump announced on Friday that the US and China have reached a partial deal whereby the latter will purchase between US$40 billion and US$50 billion worth of US agricultural products while the US agreed to suspend a tariff increase on at least US$250 billion in Chinese goods to 30 percent from 25 percent which would have taken place on Tuesday.

The announcement helped push stocks up on Friday but analysts say the deal appears to be more of a “temporary truce”.

“We think the ‘substantial’ first-stage trade deal made by Trump with China looks more like a truce than a genuine deal,” said Christiaan Tuntono, senior economist for Asia Pacific at Allianz Global Investors.

“In terms of the real thorny issues, none of that is thrashed out,” said Mizuho Bank’s Head of Economics and Strategy Vishnu Varathan.