Economic and company news by ForexMart

May 30, 2017

Asian Market Weakened as it Traded Sideways

The stock markets of Asia were unsteady on Tuesday since investors hovered in the sideline prior the publication of the raft of economic statistics scheduled this week. While, the Taipei market coupled with Shanghai, Hong Kong are not in operation due to a holiday.

Moreover, the Nikkei 225 of Tokyo declined by 0.5 percent to 19,576.19, seeing the Kospi of South Korea to plunged to 0.6 percent to 2,338.21, S&P/ASX 200 of Australia lower down by 0.1 percent to 5,701.60. Likewise, Singaporean market had a dip along with the Philippines and New Zealand but the Indonesian benchmark surge.

Jingyi Pan, a market strategist at IG based in Singapore, said that the Asian house market is projected to maintain its thin volumes which start in the countries of China, Hong Kong, and Taiwan which are all closed in consideration of the market holiday.

The data were to be issued this week would likely offer some hints for the investors about the current state of the international economy. Investors anticipate for the consumer confidence index along with the eurozone business data later this day.

On the energy sector, the benchmark for US crude dropped 4 cents up to $49.76 a barrel in electronic trading on the New York Mercantile Exchange. The contract had increased by 90 cents up until $49.80 per barrel yesterday. The Brent crude further decreased by 20 cents till $52.44/barrel in London.
 
AUD/USD Technical Analysis: May 31, 2017

The Australian dollar declined during the Tuesday trading session. Enough supportive is found close to the 0.74 region to reverse the trend and raise the price much higher. If the bullish pressure is sustained A break higher than the 0.7450 level will bring the price up towards the 0.75 level which was resistive before.

It won’t take long before the prices to go up and further be supported by the gold market with chances to go higher also when the “risk on” rally starts. However, if the gold market is used as a safety net instead, the market would fear trading and the will stagnant the Australian dollar. Nonetheless, there is still a chance to move higher when the market condition gets better.

The Aussie is gaining momentum over the New Zealand dollar which is most of the time correlated to. The Kiwi is also getting stronger going forward since there is a strong bullish tension in the market. It is much more favored in the market although both will most likely head to the same direction.

If the price breaks lower than the 0.74 level, this would not be a good sign and will affect the Australian dollar move downward. Traders should expect high volatility in the market but would not be different in the AUD/USD pair where it seems that there is an endless loop in the price trend. Hence, traders should look closely to stop losses since there will be high volatility in the market.
 
May 31, 2017

US Budget Concerns Casts Doubt on Fed Plans

The US Federal Reserve is more than ready to raise its interest rates this coming June, but the possibility of the Congress rattling up the markets by slowing down progress on increasing the debt ceiling of the US economy has cast a shadow of doubt on the Fed’s next scheduled rate hike on September. Prior to this development, the Fed has been saying that they are currently planning to implement two more rate hikes before the year ends, but has now reverted to saying that the third rate hike for year might be in for some delays if the market gets shaken by possible disagreements on fiscal policies.
 
May 31, 2017

Manufacturing Activity of China Kept Unchanged in May

Based on the data issued on Wednesday, the growth in the manufacturing activity of China was unchanged in the previous month and on the other hand, the services sector revived. This indicates that the Chinese economy slowed down.

The manufacturing purchasing' managers index earned 51.2 for this month which is the same with April result, says by the National Bureau of Statistics. The PMI utilizes a 100-point scale and a 50 mark that divides contraction against the expansion, it generally serves as an early indicator for China. The struggling factory sector had 10-month consecutive increase as it plays an important part in the Chinese economy while employing a heap of laborers.

A total of 3,000 manufacturers were polled and learned that export orders surge, however, the new orders, in general, remained steady and the global demand should perk up instead of the domestic demand so the index could creep higher. According to further reports, the factory output slid while the job rate accelerated.

Moreover, the official non-manufacturing PMI bounced back to 54.5 on the back of its six-month decline of 54.0 in the past, suggesting an improved strength for the services industry of the world’s second largest economy.

The economic growth of the Republic weakened in 2016 which is the slowest pace for almost 30 years. Nevertheless, in the latest quarter, it was able to gain 6.9 percent due to government expenditures along with the booming of the debt-fueled real estate. The growth is predicted to be unprogressive for the next months with a 6.5 percent expansion target of the government.
 
June 1, 2017

Climate Agreement Cancellation Next on Trump’s to-do List

US President Donald Trump is currently leaning towards the complete cancellation of the role of the US government in the 2015 Paris climate agreement, specifically the reduction of the country’s carbon emission, although Trump has yet to fully decide on the matter, the White House has stated last Wednesday. The paris climate change accord is composed of a total of 190 countries committed to counteracting the effects of climate change by cutting back their respective greenhouse gas emissions. The said accord aims to maintain the average global temperatures at under 3.6 degrees Fahrenheit or 2 degrees Celsius.
 
June 1, 2017
India’s Economic Growth Lose Steam due to Notes Ban
The economy of the seventh-largest country in the world experienced a steep decline in the first quarter of the year. Reflecting the November’s ban implemented by the country’s Prime Minister, Narendra Modi, triggered by the shortage of cash because this event brought a significant impact in the following months. The economy strengthened by 6.1 percent during the first three months of 2017 versus the same period in 2016. It further compared with the 7 percent increase gained amid last quarter, wherein the India’s leader announced his plan of radical demonetization.
The issued data on Wednesday officially acknowledges the effect of stripping the nation’s currency towards the economic activity of India.
As the financial year ended in March, the Indian economy acquired by 7.1 percent growth in contrast with the 8 percent gained in the same period and 7.5 percent in March 2015. The downturn highlights the ongoing dilemmas confronted by Modi, elected three years ago affirming for the revival of the country as well as generating more jobs for the young people
The construction industry shrunk by 3.7 percent that pulled the economy to its lowest level. While real estate, financial and professional services expanded by 2.2 percent as shown in the report. The muted private sector activity though was driven by the sudden surge in government activities under defense, public administration, and others gaining 17 percent on year.
 
June 5, 2017

Indian Economy Boost by 7.2 percent, World Bank Says

Apparently, India was able to recover from the negative effects brought by the demonetization as the World Bank estimated a 7.2 percent strong growth for the Indian economy, compared with 6.8 percent gained in 2016.

According to an official from the said international financial institution, they revised its projections regarding India’s improvement with 0.4 percentage points versus forecast made in January, however, the country still wear the crown as the fastest major economy to grow among other countries around the world. While the growth forecast for China remained steady at 6.5 percent for this year and 6.3 percent for the upcoming 2018 and 2019.

Based from the most recent Global Economic Prospects of World Bank, projected growth for India is 7.5 percent by the year 2018 and 7.7 percent for the following year, 2019.

In both years, the assessment was down to 0.3 percent and 0.1 percent points in comparison to predictions in the first month of the year.

Given that increase towards the India’s economy in FY2017 is roughly lower than the previous predictions that reflect indicates a sustained resurgence in the private investment sector as foreseen back then.
 
June 5, 2017

South Korea Began Stimulus Fiscal package of $10 billion for Job Sector

South Korea will release a stimulus package worth 11.2 trillion won equivalent to $10 billion U.S. dollars on Monday. This will support social welfare subsidy and part of methods for achieving the pledge of President Moon Jae-in to generate 810,000 jobs in the public sector. It is the first supplementary budget for work sector according to the country’s chief of budget Park Chun-sup.

In particular, about 5.4 trillion won is allotted for social welfare jobs such as educators, firefighters, postal employees as stated by the finance ministry while 2.3 trillion won will fund financial aid for maternity leave and medical assistance for elderlies. Overall, It is anticipated to increase 71,000 jobs for the public sector and 15,000 jobs for the private sector.

This strategy is anticipated to stimulate economic growth by 0.2 percent for the year and augment the 2017 outlook from 2.6 percent. It is also supposed to boost both income and consumption as disposable household income dropped by 1.1 percent in the fourth quarter while private consumption rose by 0.4 percent but is still lower than the overall economic growth.
 
June 5, 2017

US Jobless Rate Drops to 4.3% as Hiring Declines

US unemployment rates fell to its lowest levels reached within a 16-year period last May/ Market investors took this as a sign that the ever slow-paced US economic expansion has already reached a whole new level that has made it exceptionally hard for business to score workers with suitable working experiences. The country’s jobless rate is currently at 4.3%, which is its lowest point reached since May 2001 and is just under the level it reached during the 2001-2007 economic expansion period. On the other hand, hiring rates have posted a significant decline at a seasonally-adjusted jobs record of 138,000 from last month, which makes up about two-thirds of the recorded growth rate for the entirety of 2016.
 
June 6, 2017

Service Sector of United States Slowdown in May

Services sector activity of the United States softened last month due to downswing in factory orders, however, increase in jobs has reached its 2-year high further reflected a protracted improvement in the labor market amid downturn in jobs growth in May.

Moderation in the tertiary sector of industry coupled with further data released on yesterday showed manufactured orders fell in April. The initial slump occurred in five months as the output of laborers remained steady in Q1 which implies a tighter range for a rapid economic expansion.

The non-manufacturing business activity index dropped six-tenths percentage point which accounts to 56.9 reading. A reading on top of 50 would mean a two-third increase in the U.S. economic activity.

According to reports, new orders of services industry loss 5.5 percentage points in April. The costs of products and services under non-manufacturing industries descended on the back of its growth for the past 13 consecutive months. Nevertheless, the gauge of service sector employment boost by 6.4 percent near its highest level recorded in July 2015, showing stability for the labor market as the nonfarm payrolls gained 138,000 previously and 174,00 in April.

The value for price paid dive could probably lure the attention of some officials of the Fed Reserve on the meeting dated June 13-14 to discuss the monetary policy.

The central bank of the United States is predicted to increase its benchmark by 25 basis point during the session.
 
June 6, 2017

Slow Growth of Scottish Economy, EY reports

Based on the forecast of the EY Scottish item club that the GDP growth will be weak falling below expectation with 0.9% growth this year where a half of it is expected for the Britain and will predominantly hit the retail sector. It is anticipated to fall by 0.1% this year and will decrease in a bigger number by 0.5% and 0.3% in 2018 and 2019 respectively.


Consumers will be greatly pressured from this which will increase by 1% in 2017 and below 1% in the succeeding years until 2020 while the employment is assumed to drop by fall this year.


On the other hand, the manufacturing sector will rise following the overall economy for the first time since 4 years ago, because of higher demand and depreciation of sterling which will boost exports.


Overall, the Scottish economy is foreseen to have a sluggish growth than the Britain by 0.7% in 2018 before gaining its momentum again to reach 1.4% growth within this decade.
 
June 6, 2017

World Bank Predicts Seven-Year High for 2018 Global Economic Growth

In a statement made last Sunday, the World Bank predicted that a possible correction in trade growth stemming from post-crisis lows might be able to help strengthen the international economy and enable a seven-year high for next year’s economic growth status. However, the bank also stressed that there are certain threats to the emerging markets niche, including a fast-expanding wealth economy, which could derail the predicted growth rate for the economy. The financial institution said that international economic growth could possibly reach 2.9% in 2018 as compared to this year’s mere 2.7%. Price stability in commodity prices has helped emerging markets out of its two-year slump, while several countries around the world are finally showing signs of improvement following a large-scale financial crisis.
 
June 8, 2017

‘Hard’ Brexit Weigh Against UK Economic Performance

The British economy is projected to slow down this 2017 and the following year as it was inundated by diverging issues caused by Brexit negotiations.

The Organisation for Economic Cooperation and Development (OECD), said that risks and expected results of the referendum would likely hurt private consumption.

According to forecasts, UK economic growth is 1.6 percent for this year while predicted to gain one percent in 2018 with a steady outlook versus estimated figures in March.

Moreover, OECD presented their prediction for other economies in 2018 showing positive growth and set out a constant projection for the United Kingdom.

The organization assumes for a hard Brexit thinking that Britain is going to trade against a much restrictive term under the World Trade Organisation upon leaving the European Union in 2019, in case that it fails to obtain an all-inclusive free trade agreement.

The most recent OECD’s world economic outlook indicates slower growth which could drive jobless rate higher than five percent. Nonetheless, the intergovernmental entity told that "swift progress in negotiations and an outcome that retains strong trade linkages with the European Union would lead to better outcomes than projected".
 
June 9, 2017

ECB not yet to Withdraw Stimulus Program

The European Central Bank decided to loosen its monetary policy on Thursday but indicated that it further needs some support from the central bank amid increasing growth.

Mario Draghi, ECB president, is very cautious in his announcement regarding the withdrawal stimulus.

During the meeting held on Thursday which is accompanied by 25 members of the council, the bank kept its interest rates and bond-purchase stimulus program steady.

The governing council settled small adjustments towards the 19 emerging countries that utilizes the European currency by stating that interest rates could probably move lower. While Draghi issued another significant change as he described that risk to growth is currently “broadly balanced”, the tweak was announced during the April wherein risk are said to "tilted to the downside."

Carsten Brzeski, analyst at ING-DiBa, allegorize the bank’s statement to a baby’s first step intended to taper the stimulus effort. The financial institution preserved its bond-buying program at 60 billion euros ($67 billion) each month which will last this year or longer.

Moreover, ECB officials were in a stew for the market’s response to the untimely notice that the stimulus will end as the rates will climb higher, undermining the effects.
 
June 9, 2017

Limited Drop of Sterling in the Global Market

On Friday, the British pound slumped following vague results without a particular party that dominated that election. Hence, investors are trying to weigh on risks including both event in the United States and Europe. As a result, the cable dropped by 2 percent amid the political problem that could hamper the Brexit talks and causing more uncertainty which will begin in more than a week.



Yields on 10-year gilt dropped by 3 basis points to 1.00 percent while the the FTSE futures recovered as it gained 0.2 percent bringing hopes up to economic progress. The e-mini futures for the S&P 500 has a lesser impact as it increase by 0.1 percent.



The single currency slid overnight following the announcement of ECB forecast to ease inflation but did not talked to tune down the massive bond-buying campaign pushing bond yields to multi-month lows. It’s effect in the global investment market can not be defined as it represents just 2.5 percent of world GDP.
 
June 13, 2017

Italy and Qatar to Continue Economic Ties

Countries, Italy and Qatar decided to maintain their deal regarding close integration on economy and finances. Even the decision of some Arab Countries along with Saudi Arabia and the United Arab Emirates is to break diplomatic, travel and trade agreement with Qatar.

The consensus was succeeded by a meeting between Italian Economy Minister Pier Carlo Padoan and Qatari Finance Minister Ali Sherif Al-Emadi held in Rome on Monday.

The two countries said in a joint statement that they discussed the ties in a very friendly atmosphere in accordance with its outstanding relationships on economics and politics

The visit of Al-Emadi in Italy is part of the leader’s European tours, hence he will also go to Berlin, London, Paris, and Washington.

The sovereign states of Arab which include Saudi and UAE ended its agreement with Qatar in the past week, they believe that Doha supports the finances of Iran together with other Islamist groups, but Doha refuted this accusation. While al-Elmadia stated earlier on Monday that his country is able to protect its economy against these charges.

In an interview with CNBC, he further mentioned that those countries that inflicted such sanction have the tendency to lose money due to the damage it wrought in the business sector of the region.

"A lot of people think we're the only ones to lose in this ... If we're going to lose a dollar, they will lose a dollar also," the leader added.
 
June 13, 2017

Finland’s Export Data Shows Signs of Recovery

The Bank of Finland forecast data shows the growth of Finland’s economy as exports recuperated gains although it still needed reform to enhance development and stronger public finances. This growth is marked as a big progress following a decade state in hiatus state due to various economic and business problems. The GDP progress is anticipated to improve by 2.1 percent in 2017 which is higher than the former forecast of 1.6 percent in March. In the previous year, the GDP grew by 1.4 percent.


Amid the steady growth of exports, the economic growth still depends on the private consumption and investment and will further progress when the employment condition gets better to support an increase in purchasing power. Hence, the center-right government has lessened expenditures and eased labor laws yet the central bank sees the need other strategies to boost the current and future growth.
 
June 14, 2017

Germany’s Economic Confidence Declined Unexpectedly

Financiers from Germany shows confidence towards the recovery of the Euro region, however, the UK economy is not lucky enough to gain a stronger stance. Since the economic condition of the Great Britain fell off this year, along with its prospects, based on the data from the ZEW think tank, as the European economic research institute conducted a poll for almost 200 investors.

The margin came higher for the UK compared with other economies mentioned in the survey, because German capitalists are disappointed with the latest economic status. It appeared that more than 63 percent of the respondents predicted that the situation will get even worse during the second half of 2017 which is the highest ratio versus other nations involved in the poll.

According to headline ZEQ indicator, the projections for the German economy had declined comparatively reaching 18.6. While the presumptions for the euro zone was raise to 37.7 versus other confidence indices like PMI and Ifo. The reading of the ZEW headline was keep restrained below the average level which started in 1991.
 
June 14, 2017

Credit Losses Bound to Get Higher in the Industry

Credit card losses will most likely increase in volume in the United States and all over the industry especially to JPMorgan Chase & Co. as mentioned by Gordon Smith, the head of the bank’s consumer businesses during the conference held on Tuesday.

U.S. banks are being objective in their policy decision on whether to tighten credit policies and it is not far that most lenders within the financial sector are inclined to impose a stricter credit card lending standards instead of attenuating it.

JPMorgan earnings are seen to have increased in sales volume but declining credit trend that is still similar to other lending institutions. It is forecasted as shown in the Fitch ratings report that this will persist in the next few quarters because of the rising trend in loan growth pushed by lower credit rates. However, Smith said that there is no need to get distressed over this matter as this is already expected after some time of low loss rates in the past and is now approaching the end of the cycle.
 
June 14, 2017

May Appoints Political Opponent as Junior Minister

UK Prime Minister Theresa May has recently appointed a leading anti-EU Tory campaigner as a junior Brexit minister following unrest within the PM’s team of officials assigned to work on the Brexit negotiations a mere week before the actual start of the said negotiations. The newly-appointed official was identified as Steve Baker, who used to be UK’s chairman of Conservatives. Baker has also led a group of Tory lawmakers which aims to hold the UK government against a complete separation from the European Union.
 
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