Daily Management Review

World stocks update record high


08/08/2017


World stocks update highs on Tuesday, despite weaker than expected data on China's trade, which overshadow prospects for global growth, writes Reuters.



The Central Intelligence Agency
The Central Intelligence Agency
China's imports and exports lagged far behind forecasts last month. Exports from China in dollar terms increased by 7.2%, imports - by 11% compared to the same period last year. Analysts slowed the growth of exports from 11.3% in June to 10.9% in July, and imports from 17.2% to 16.6%.

Despite the weak data from China, the MSCI World index reached 480,76 points, updating the record.

Shares around the world reached record highs amid record low volatility, supported by a favorable environment for global growth.

Fitch rating agency this week increased its forecasts of world GDP growth in 2017 and 2018 up to 3% (from 2.9% in June) and 3.2% (from 3.1%) respectively.

"The data continues to indicate synchronous global growth in both developed and developing countries, and the effect of demand recovery in emerging markets is reflected in the fastest growth in world trade since 2010," explained Fitch Chief Economist Brian Coulton.

The European Stoxx 600 index fell 0.1% as a result of a decline in the shares of mining companies.

The shares of energy companies grew, as oil prices stabilized after the recent recessions. Saudi Arabia will reduce crude oil sales to Asian buyers as part of agreements to reduce exports and global fuel surplus, Bloomberg reports citing informed sources.

The MSCI index in the Asia-Pacific region outside of Japan added 0.2% and returned to ten-year highs.

South Korea's stock index fell 0.2%, the Japanese Nikkei lost 0.3%. The main indices of China grew by 0.1%. The Hong Kong Hang Seng closed higher by 0.6%.

In currency markets, the dollar fell for the second consecutive day after rising on Friday amid stronger than expected data on the number of jobs in the US. According to some analysts, these statistics has increased the likelihood of further interest rate increases by the US Federal Reserve.

However, many in the market doubt that the Fed will increase the cost of borrowing this year.

President of the Federal Reserve Bank of Saint Louis James Bullard said on Monday that the US Central Bank will not need to raise interest rates in the short term, as inflation is not expected to grow very much.

Fed officials "opposed further rate hikes, which means they accurately reflect current market expectations that limit the strengthening of the dollar," analysts at Commerzbank in Frankfurt wrote in a morning note to clients.

The dollar index fell by 0.2%. The euro strengthened 0.2% to $ 1.1811, while the yen rose at a similar pace to 110.54 per dollar. The pound sterling rate rose by 0.1% to $ 1.3045.

The yield of Germany's 10-year government bonds remains near the low for more than a month on the back of expectations that the curtailment of the European Central Bank's incentives will be gradual.

This view was reinforced by the data showing on Monday that the volume of industrial production in the largest economy of the Eurozone in June unexpectedly decreased by 1.1% compared to the previous month.

Brent crude rose in price by $ 0.16 to $ 52.53 per barrel. A source familiar with the situation told Reuters that the state oil company of Saudi Arabia, Saudi Arabian Oil Co., (Saudi Aramco) next month will reduce shipments to its customers by 520 thousand barrels per day.

"Support is provided by the stabilization of the number of drilling rigs in the United States, the drop in stocks in the US and the reduction in exports from Saudi Arabia," said Ole Hansen, head of the strategy department at the commodity markets of Saxo Bank. "But we still have a steady growth in production in the United States, Libya and Nigeria. "

The cost of gold increased by 0.3% to $ 1261 per ounce.

source: reuters.com






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