China stimulus extends correction

17 January, 2019

A solid kick off for the U.S. earnings season, Theresa May surviving a vote of no-confidence, China’s central bank pumping record liquidity, and policymaker assurances to take the right actions were all key factors in supporting risk in financial markets and keeping equity bulls in charge.

Upbeat U.S. bank earnings boosted investors’ confidence this week. Goldman Sachs was up 9.5% on Wednesday after beating estimates by a wide margin on both top line and bottom line. Yesterday’s surge in its stock was the best reaction to earnings results in a decade. Bank of America also crushed expectations and ended the day 7.2% higher. The numbers released so far from U.S. banks managed to ease some concerns on the economy. However, confirmation is still needed from other sectors - mainly the cyclical ones - to provide better guidance on how consumers are behaving, which is critical to future earnings.

Prime Minister Theresa May’s government survived a no-confidence vote yesterday, just one day after her humiliating Brexit defeat. This result seemed to have been properly priced into the Pound given the slight reaction to the news. A snap general election appears to be out of the equation now, but there is still a high probability of a second referendum taking place. Although a soft Brexit remains to be the most likely scenario, it’s a tough call to make. Expect an extension of Article 50 to provide a further boost to the Pound, but if May starts to open up to the idea of a second referendum, Sterling may easily jump above 1.30.

Additional stimulus from China also managed to boost sentiment. After cutting taxes in response to disappointing industrial production figures and falling exports, monetary authorities injected a record $84 billion into the country's banking system. Such actions indicate that China will continue to use all available tools to reduce the impact from ongoing trade tensions with the U.S. However, this will only have a short-term impact on markets and only some sort of agreement with the U.S. to end the current trade tensions will provide a sustainable positive influence.


Source link  
Deadlines are fast approaching

After a strong rally in risky assets since the beginning of 2019, anxiety and concerns over global economic growth have returned. This was evident...

U.S. Dollar on six-day rally streak

After a robust performance in 2018, the Dollar's rally was expected to come under significant pressure going into 2019. Well, that may not be so true...

Yuan marches to fresh 6 month high

It has certainly been a positive trading week for the Chinese Yuan thanks to renewed optimism over trade talks and a broadly weaker Dollar. The local currency...


Powell gives equity bulls all they need

The Federal Reserve has taken a 180-degree turn. After raising interest rates four times in 2018, the Fed said it would be patient as it determines...

A busy week ahead for financial markets

The longest government shutdown in US history is finally over at least temporarily after President Trump announced the reopening of the government...

Risk sentiment hit by IMF pessimism

A wave of risk aversion swept across financial markets today with global equities retreating as pessimism over global growth sapped risk sentiment...


Markets take a U-turn after disappointing

After a positive start to the week, Asian equities fell today amid rising concerns over the global economic outlook. The market is currently being...

EM currencies mixed despite optimism

The mood across financial markets was mixed this week as investors tussled with Brexit drama, US-China trade developments and a partial...

Rally losing momentum

Investors have kicked off 2019 in a positive mindset. The S&P 500 rallied during 5 out of the past 6 trading days booking 3.1% gains so far...


In the past 24 hours Bitcoin has gained 1.14% and reached $3680.60143312. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has lost -0.5573% and is now at $1.1277. Start trading and making money on Forex today.

In the past 7 days Ethereum has gained 9.38% and is now at $129.093602431. Have the most popular cryptocurrencies compared online 24/7.


Top Brokers offering Forex Market Analysis



Forex Currencies Forecasts



Top 10 Forex Brokers 2019

# Broker Review
1easyMarketseasyMarkets92%
2FXTMFXTM88%
3HYCMHYCM87%
4FxProFxPro85%
5FIBO GroupFIBO Group84%
6OctaFXOctaFX83%
7HotForexHotForex82%
8FXCMFXCM79%
9XMXM73%
10FP MarketsFP Markets70%
  


Share: