Markets in Details: 02 October 2019

2 October, 2019

Trade outlook for the global economy is constantly affected by weakening exports and declining sentiment mainly caused by a discord between the states. The U.S.-China trade continues to be the factor blamed for much of the economic weakness in trade-dependent economies such as Japan, South Korea, Italy, Germany, and Australia.

Business confidence in the U.S. took a hit in September, as the ISM Manufacturing PMI showed contraction, slumping to 47.8 against the forecast of growth. And while the manufacturing PMI in the euro area exceeded expectations, the weakest data since October 2012 also showed contraction.

Inflation in the EU came out well below consensus estimates at the annual rate of 0.9%, creating a big gap with the ECB's target rate of 2.0%. Weakening economic growth would usually lead to rate cuts, but the inflation is low at the moment. This is partly the reason why the ECB QE/stimulus package announced on Sep.12 was met with notable resistance. Eight of the 25 members of the council opposed the latest stimulus measures, including representatives of large economies like the Netherlands, France and Germany.

Investors will have a new chance to reassess the U.S. economy when the job report comes out on Friday.


Source  
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