By Deepta Bolaky
After a first-quarter rally driven by dovish central banks and trade optimism, global growth concerns crept into the financial markets towards the end of March and set a watchful tone for the second quarter. Despite signs of a slowing global economy, global stocks posted the best quarter since 2010.
Flashing red signals dampened risk sentiment, and investors are looking for reasons to push the rally further.
The PMI figures is an important indicator of business conditions and the overall economic condition of a count. The data released on Monday had set a positive tone for the week. Chinese economic activity bounced back from a contractionary level below 50 to rise to 50.8 in March. ISM Manufacturing PMI figures also improved to 55.3 in the US.
The PMI data of the world two largest economies were upbeat enough to calm investors’ nerves about the heightened concerns of the deepening slowing global growth.
After the surprise dovishness from the RBNZ, traders were keen to see if the RBA echo the same comments. We did not see the same actions, but the tweaks in the language were dovish enough to put pressure on the local currency during the week. The main differences in words were for the labour market and the switch from “should” to “is expected” to see some further lift in wages have raised concerns on the gradual process of the increase in wages.
Brexit remains chaotic and the UK Parliamentary vote at the start of the week was disappointing as none of the alternative motions got a majority.
The week progressed with the news that Theresa May will hold constructive talks with the Opposition Party.
The equity markets held well given how the bond markets rattled the financial markets last week. PMI figures and hopes of progress on trade negotiations helped equities to remain mostly in positive territory.
The US stocks rose to almost six-month high during the week as manufacturing data was reassuring and at the same time, economic data releases were soft which will keep the Fed on the side.
In Asia, the rally in the first quarter reached a peak where investors await the next catalyst to push equities higher. As if writing, the performance in Asia on Friday morning was mixed.
In the currency markets, the US dollar was mostly higher against nearly all G10 currencies.
The Antipodeans were under pressure following dovish tones and elevated growth concerns from the Reserve Bank. However, the Aussie Dollar managed to recover from the better-than-expected trade balance and Retail Sales figures.
The British Pound remains volatile due to the Brexit jitters and directionless with a Brexit deadlock. As of writing, the GBPUSD pair consolidated in a tight range ahead of the Nonfarm payroll which could be the next key driver for the pair.
The Euro edged higher against the US dollar despite the latter consolidating gains. PMI and Retail Sales figures were upbeat and supported the Euro. However, overall data in the Eurozone is uninspiring which put pressure on the shared currency.
In the commodities market, the oil markets were supported by the recovery in the stock markets and reduced fears on global growth. Trade optimism was also a bullish driver of oil prices. However, this week oil reports were bearish and put downside pressure on WTI and Brent Crude. Towards the end of the week, oil prices pared some gains.
UKOUSD and USOOSD (Hourly Chart)
Source: GO MT4
Cryptocurrencies rallied this week with no clear drivers behind the upsurge. Bitcoin climbed above $5,000 before trimming some gains. It is currently trading in the $4,900 range.
BTCUSD (Hourly Chart)
Source: GO MT4
|Monday, 08 April 2019
Indicative Index Dividends
Dividends are in Points