Investors remain on the defensive

5 September, 2017

Asian equity markets remained under pressure for a second consecutive day. Nervousness is still being felt through some asset classes after Sunday’s North Korea’s nuclear test, with the flow continuing into the Yen and Swiss Franc in particular. 

The most significant statement heard yesterday was from Nikki Hayley, the U.S. ambassador to the United Nations. She warned that Kim Jong Un was begging for war, and the time for half measures from the U.N. has to end. However, she continues to see that the problem should be resolved through diplomacy.

With tougher sanctions on North Korea looking to be the most likely scenario, markets will discount the possibility of war, but the risk-off mode may continue to persist a little longer as there are more missile launches on the horizon. Investors have been searching for a catalyst that will lead to a steep market correction, but if a hydrogen bomb wasn’t enough to trigger the selloff, then any new experiments from the Kim Jong Un regime won’t get traction, and investors should focus elsewhere.

European stocks fell yesterday, but the declines were modest with the FTSE 100, CAC, and DAX finishing down less than 0.4%. European and U.S. bonds benefited from the flight to safety but the declines in yields were insignificant.

On the data front, China’s services sector jumped to a three month high of 52.7 after dipping in July. Meanwhile Japan’s service sector showed activity declining to a six-month low of 51.6, as the pace of new orders fell, an indication that growth in this sector may flatten over the next couple of months.

The Aussie fell slightly after the central bank kept interest rates unchanged for the 13th consecutive month, but it’s still up 0.2% for the day. RBA’s governor continued to warn that an appreciating exchange rate would be expected to result in a slower pick-up in growth. Given that investors continue to search for yield, such comments won’t stop traders from buying the currency.

In Europe focus will be on the final services PMI reports, but the U.K. services sector will be of special interest given that construction slipped to a one-year low of 51.1.

The U.S. markets will return from the Labour weekend break, with equity futures indicating a slight selloff. Speeches from FOMC members Lael Brainard and Neel kashkari are likely to drive the dollar’s move, as markets need some answers on the timetable of the Fed’s balance sheet reduction, and whether another rate hike in 2017 is still on the cards.

Source link  
Earnings vs. Interest Rates: who wins?

Global equity markets failed to resume any kind of strong rebound following Tuesday's surge. Asian equity indices are deep in the red today...

Dollar lifted by hawkish Fed minutes

Dollar bulls were back in action on Wednesday evening after minutes from the Federal Reserve's September meeting reinforced expectations...

Yuan firms on Dollar weakness

Global investors will likely remain on high alert throughout the end of the week to see if the largest market sell-off since early 2018 will...

EM currency weakness refuses to go away

Tuesday has seen stability in Chinese markets following a very nervous beginning to the new trading week yesterday. Signs of China market stability...

Yuan eases on risk-off sentiment

Financial markets have entered the new trading week on negative footing as a mixture of different market themes weigh on investor sentiment...

Risk assets under pressure from rates

Chinese equities took a big hit after traders returned from a week-long holiday. Efforts by the People's Bank of China to free more than $100 billion...

U.S. Treasury Yields boost the greenback

The U.S. Treasury selloff on Wednesday was the biggest story in the financial markets. This time it wasn't only the rate-sensitive two-year yields that marched higher...

NAFTA deal fails to lift global risk appetite

Global investors remained defensive on Tuesday despite the U.S. and Canada agreeing to a new trade deal ending months of uncertainty...

Dollar steady after Fed raises rates

In a widely expected move, the Federal Reserve has raised its key interest rate by 25 basis points for the third time this year. The central bank...

In the past 24 hours Bitcoin has gained 0.33% and reached $6483.09561171. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has gained 0.6352% and is now at $1.1587. Start trading and making money on Forex today.

In the past 7 days Ethereum has gained 2.86% and is now at $205.385250695. Have the most popular cryptocurrencies compared online 24/7.

Top Brokers offering Forex Market Analysis

Forex Currencies Forecasts

Top 10 Forex Brokers 2018

# Broker Review
6FIBO GroupFIBO Group84%