Market Round Up: What to Watch 🔭  Bali H’ai 🌋

by | 9 Oct, 2018

 

1. What to watch

Despite today being a quiet day for the U.S. market, there is a plethora of Fed members scheduled to deliver remarks in the week ahead. At the moment, the market is betting on a high probability that the Fed will raise rates by another 25bps (a quarter of a percent) in December. Whilst U.S. data has been pretty strong in recent weeks, triggering last week’s rout on Treasuries (USTs), readers beware that the U.S. is already in a mature stage of the business cycle and the risk remains that the expectations of another interest rate hike are overdone.

There will also be a lot of interest later in the week when credit rating agency Moody’s releases an update on the U.S.’s sovereign debt rating. In light of the increase in UST issuance required to finance the ballooning budget deficit, everyone will be waiting with bated breath on Moody’s assessment to see whether it still deems it deserves the AAA rating.

It’s a public holiday in Japan, today, while China returns from its holiday. Markets there will be playing catch up after the Golden Week holidays. On the news front, it has been announced that Chinese investments in Australia plummeted 40% in 2017 from 2016. This sharp decline was likely due to the diplomatic spat between the two countries and a decision by the Chinese government to implement controls on the outflow of capital.

In Europe, Germany saw a contraction in its industrial production in July. Furthermore, market consensus is pencilling in a further decline in industrial production in August. The worrying aspect for this export-orientated economy is that export orders dropped at their steepest rate in five years – potentially a sign of broader suppression of economic activity at a time when trade war concerns are in vogue.

Lastly, with nothing on the cards in terms of data releases this week, all eyes will be on the UK’s Brexit plans. There appears to be some optimism that a deal could be reached soon, with reports emerging that the EU is set to be open to a free-trade deal! If any new information emerges suggesting that such a deal will be struck soon, a rally in the pound can be expected.

Companies publishing earnings this week include Walgreen Boots and WH Smiths which are worth watching to gauge the UK retail mood, Delta Air and big banks JP Morgan, Wells Fargo and Citigroup.

Related: Making a profit from trading company earnings announcements – a beginners guide

 

2. Bali H’ai

Another big event happens this week, in Bali. Finance ministers and central bankers from around the world will be among 30,000 delegates in earthquake-stricken Indonesia for the annual meeting of the IMF and World Bank. It is expected to deal with rising protectionism, vulnerable emerging markets and record debt levels.

Meeting on the travellers’ paradise island of Bali, the focus is expected to be on averting economic disasters, the Sino-U.S. trade war. Like the Organisation for Economic Co-operation and Development (OECD), which lowered its economic growth forecast for the world economy to 3.7% for 2018, IMF chief Christine Lagarde signalled the fund would cut its outlook – which stood at 3.9% last July.

Related: What are emerging markets and why are they important?

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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