Daily Management Review

Global Markets Went Through A Roller Coaster Ride This Week


Another rocky week ended on Friday as the global markets ended on a lower note, although recuperating quite a bit of their losses.

The global markets experiences quite a wild ride this week, which on the Friday evening only closed with “a whimper”. This was resulted by the investors focus being turned towards “central banks' ability to avert deflation” instead of pumping into the commodity and equity markets.
Even though it may seem “insignificant” given the fact that some markets have witnessed nearly a ten percent drop and rebound this week, yet amid the choppy trade the European indexes got some blue-chip which helped them on track whereby ending the week a little below than the estimate level. However, the worries concerning the markets ended up with a “higher finish”.
The central bank of China pumped in “60 billion yuan ($9.39 billion)” into the “money market”; this has been the second time that the bank invested within the same week. Moreover, Reuters informs that
“... (the) inflation data out of Germany later on Friday is likely to set the tone for the European Central Bank's meeting next Thursday as deflationary pressures rise around the world”.
The losses of equity markets have been recovered this week through a “bruising sell-off” which followed the slow moving economic growth of China resulting in a worry amongst the analysts. However, the “end-of-year market forecasts” data has been reduced by the strategists from the 20th to 26th of August, whereby the record displayed an equity funds’ outflow of “$28 billion”. Strategists note that:
"Current equity and bond yields suggest that investors are shifting towards pricing in a global recession ... We think that such fears are premature”.
The All-Country World Index of MSCI, on Friday culminated after a high week on an increment of “0.3 percent”. The market data statistics show that:
“The pan-European FTSEurofirst 300 index was down 0.5 percent at 0929 GMT, with benchmark indexes in London, Paris and Frankfurt down 0.1 to 0.7 percent”.
While, the crude oil price in the U.S came down to “$42.27 per barrel”, resulting in a twenty seven percent downfall. In fact Brent fell by 38% though it managed to pull together its “biggest one-day bounce since 2009 on Thursday”.
The sluggish demand of oil market and the access supply have tipped the market balance and the price came down by one third of market value that it held last year. Nevertheless, the investors didn’t take refuge into the safe havens of “U.S. dollar or German sovereign bonds”.
On the other hand the “emerging markets” reaped the real benefit whereby the equity index of MSCI emerging markets went up by 0.7 percent while some thoughts this were just the beginning of “signs of value”. Jupiter Independent Funds Team’s head, John Chatfeild-Roberts remarked:
"The bull market in shares is getting long in the tooth but QE (quantitative easing) is still a major factor for markets in Europe, the U.S. and Japan ... Policymakers are also likely to defer planned rises in interest rates”.
Source(s): Reuters.com