Stock markets continued to move higher in Asia

16 February, 2016

Stock markets continued to move higher in Asia

FX News Today

Stock markets continued to move higher in Asia, but with gains moderating after yesterday’s rally. The Nikkei is up 0.2% and the Hang Seng 1.23% on the day. US and UK stock futures are also higher. Risk appetite is reviving and Draghi’s remarks yesterday that the ECB is “ready to do its part” to boost the Eurozone are helping. Elsewhere RBA minutes left the door open to further easing. Oil prices are moving higher and the front end Nymex future is trading above USD 30 per barrel. The calendar has German ZEW investor confidence, which we expect to fall into negative territory at -0.5%, down from 10.2% in January. The UK has inflation numbers, which are likely to remain benign. In Germany the ECB’s OMT program is once again under the scrutiny of Germany’s top court, who has to deliver its final verdict, after the European top court effectively backed the program.

The RBA Board decided to leave the cash rate unchanged at 2.0 per cent. In considering the stance of monetary policy, members noted that recent domestic data had, on balance, been positive and judged that there were reasonable prospects for growth to increase gradually over the forecast period while maintaining inflation close to target. Employment growth over 2015 had been stronger than earlier expected and the starting point for the forecast for the unemployment rate was around ½ percentage point lower. Inflation continued to be relatively low, with underlying measures of inflation at about 2 per cent over 2015. Growth in labour costs also remained quite subdued. Based on the available data and the forecasts for economic activity and inflation, members judged that it was appropriate to leave the cash rate unchanged at an accommodative setting. Over the period ahead, new information would enable the Board to assess whether the recent improvement in labour market conditions was continuing and whether recent financial market turbulence presaged weaker global and domestic demand. Read more here.

ECB’s Deaghi said that the central bank “is ready to do its part” and will “review, and possibly reconsider the monetary policy stance in early March.” He said much will depend on the “size and persistence of the fall in oil and commodity prices and the incidence of second-round effects on wages and prices.” He argued that in light of recent financial turmoil “we will analyse the state of transmission of our monetary impulses by the financial system and in particular banks.” Draghi gave away nothing new, leaving the door firmly open to more action but taking a cautious line ahead of tomorrow’s hearing of the OMT (outright monetary transactions) program before the German Constitutional Court (which could still throw a spanner in the works). He did, however, note “increasing concerns about the prospects for the global economy” and “intensified” turbulence in financial markets.” Draghi has been speaking before a European Parliament Committee.

Main Macro Events Today

UK Inflation numbers are due today. The January Core consumer price index (YoY) is expected to come in at 1.3%, slightly below December figure of 1.4% while the headline inflation number (including food and energy) is expected to move up one tenth from 0.2%.

German ZEW Economic Sentiment will be released today. We expect ZEW to fall into negative territory, thus highlighting that pessimists now outnumber optimists. We are looking for a sharp drop to -0.5% from 10.2 in January, a decline that will only add to mounting growth concerns.


Source link  
FOMC meeting is front and center this week

The FOMC meeting is front and center this week following the solid November jobs report on Friday, which provided the final bit of cover for...

Oil prices are down

Asian stock markets headed south again, as declines and energy and mining stocks led shares lower amid a further drop in metal prices. Concern China’s regulators may limit the flow...

Asian stock markets moved slightly higher

The rout on Chinese bond and stock markets that dominated Thursday’s session faded and the Nikkei managed a 0.12% gain as the yen...


Markets will keep a wary eye on politics

After a couple of panicky moments in global equities over the past week, the markets will keep a wary eye on political developments. In Washington...

Recovery on global stock market

A round of positive earnings from U.S. companies reports and progress on the U.S. tax reform plan underpinning risk appetite. The Hang Seng...

Focus returns to Brexit talks

The President Trump is off to Asia, the earnings season is winding down and the data calendar is thinning. There are several central bank...


Dollar majors posted narrow ranges

EUR-USD has settled around 1.1750 after logging a two-week low at 1.1724 late yesterday. Market participant will remain vigilant on developments...

The dollar remained on the ebb

The narrow trade-weighted USD index is showing a modest 0.2% loss as the London interbank opens, at 93.23, having extended the decline from...

Trump bump seemed to get renewed

That added to an already optimistic tone after signs of solid consumption growth and fixed investment in the U.S. Q2 GDP and with the strength...

  


Share: