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Global Markets Update

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Markets continue to focus their attention on the same factors that have been the focus of attention for weeks. This has led to a continuous sideways move in most of the indexes during the last weeks. Hence, these factors such as the trade worries continue to influence negatively on the markets.

  • On one side, there is the commercial dispute between the US and China along with the EU.
  • On the other side, the evolution of energy prices and their potential impact on inflation figures.

This weekend, if everything goes as expected, Trump will impose tariffs which are worth over $35bn on Chinese goods.

  • A little bit more from the initial $50bn announced.

It is thought to be a measure to pressure the counterparty and gain a more favourable position in the trade deal.

  • The main problem with this is that it is a large procedure and one which does not look to end in the near future, and further to not finish before the mid-term elections in November.

These factors, along with the higher rate of interests in the USA and a stronger dollar, are hurting emerging markets.

  • Also bearing in mind that the Latin markets are being influenced by the political elections.
    • Recent elections in Mexico
    • Brazilian elections after summer

Thus, Chinese markets are suffering from all these. However more interesting is the 5% appreciation of the Yuan against the US Dollar in just one month.

  • This, on one side, indicates a lower growth expectation. However, it signals the way to free the trade war, through competitive devaluations.

On the other hand, the overall market is ignoring some positive figures like the ISM Manufacturing Index which was published last Monday and reached 60.2 points.

  • This indicates expansion and growth apart from reflecting on how the level of interest of investors is at February levels.

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