Capital Markets Global market overview
The capital markets global has been going through some volatile moments and is good to have an international look at what is more important for both equity and currencies.
US – Capital Markets Global market overview
“The last few days have seen the continuation of the trend of higher stock prices and a lower US dollar. The Fed Chair Janet Yellen’s testimony to the Senate Banking Committee on Friday has reiterated that the Central Bank is continuing to pay close attention to the recent weakness of inflation. While the Fed expects the prices to start rising more quickly, any further weakness could prompt the US Central Bank to slow down its current interest rate hike spree. This helped drive the Dow Jones Industrial Average and the S&P 500 to close at records last week.
US retail sales also dropped 0.2% month-on-month, from a 0.3% drop in May. The US consumer price index rose 1.6% year-on-year in June, down from 1.9% growth in May. Core CPI was unchanged from May, showing 1.7% annual growth. The failure of inflation to approach the Federal Reserve’s 2% target lowered the chances it would raise rates at its next meeting and sent investors rushing into bonds. A number of Fed Governors have questioned whether the data currently justifies a further increase in interest rates. The appetite for equities continues to be strong despite disappointing results for Citigroup and JP Morgan. The Dow Jones index gained 0.4%, the S&P 500 climbed 0.5% to a record, and the Nasdaq index was up 0.6%.
The yield on the benchmark 10-year U.S. Treasury note fell Friday, capping its largest one-week decline in more than a month. Bond prices rallied after the consumer-price index was unchanged in June from the prior month. The lower-than-expected figures were the latest sign of muted inflation. The 10-year yield settled at 2.319%, compared with 2.348% Thursday and 2.393% a week earlier. It was the yield’s largest weekly decline since the week of June 2.”
Europe – Capital Markets Global market overview
“German 10-year Bund yields were flat, ahead of the European Central Bank meeting on Thursday, where no change is expected. The market expects an announcement in September on the ECB’s plans to unwind quantitative easing. UK 10-year Gilts were also unchanged, after Chancellor of the Exchequer Philip Hammond continued to push for a much softer and more gradual Brexit, seeking a longer period of transition.
The U.K. is due to publish consumer inflation data for June on Tuesday. This is expected to show inflation at 2.9%, a near four-year high. Inflation is clearly on an upward trajectory due to the pound’s sharp depreciation after last year’s Brexit vote. Wage growth has been lesser than inflation, which has squeezed living standards and led to a decline in consumer confidence and spending.
In Europe, markets will focus on the ECB meeting on Thursday where no change is expected in the benchmark interest rate. The focus will be on a possible withdrawal of the reduction of the bond buying programme. Any move on this will be gradual and cautious as inflationary pressures remain subdued despite the pick-up in economic growth.”
Asia – Capital Markets Global market overview
“China’s economy showed surprising resilience in the second quarter, as efforts to rein in financial leverage and property speculation seems to have had a limited impact than expected on growth. The economy expanded by 6.9% in the second quarter, unchanged from the first quarter. Robust exports and resilient consumption helped offset a slowdown in investment. The result leaves China well placed to meet its 6.5% growth target for the year, though concerns remain over how much the economy will slow in the second half.
The detail of the data is as follows: Industrial output rose by 7.6% in June from a year earlier, higher than a 6.5% increase in May and better than market expectations. Retail sales grew 11.0% in June from a year earlier, accelerating from a 10.7% increase in May and beating expectations.
Chinese equity markets tumbled shortly after trading began on Monday, dragged by a plunge in small-cap stocks after a high-profile financial conference signalled that policy makers are focused on tighter control of the economy. Policy makers at the National Financial Work Conference were reported to have mentioned “risk” 31 times and “regulation” 28 times – definitive signs for investors to worry about.”
Commodities – Capital Markets Global market overview
“In the FX market, the US dollar continues to be weak with softer economic data on Friday pushing it lower. Sterling made sharp gains on Friday following the downbeat U.S. economic data and is currently trading at 1.3082 against the US dollar.
Oil prices are up 0.5% in Asia trading adding to last week’s gains. The WTI is currently trading at USD 46.76, Gold prices started the week modestly higher in Asia, building on Friday’s gains which followed the soft U.S. inflation data and is currently trading at USD 1230.6 per oz.”
About Sun Global Investments
Sun Global Investments Ltd. is an international financial services firm based in London, providing a full scope of services to institutional investors, corporate companies, family offices and high net worth individuals. Established in 2008, in the midst of turmoil in the financial services industry, Sun Global identified lucrative investment opportunities in emerging market corridors and has since established itself as a trusted boutique firm for investors looking to take advantage of these versatile markets.
The company has three core functionaries: Wealth Advisory, Corporate Finance and Securities Trading. Wealth Advisory specialises in Portfolio Management, Lifetime Investment & Inheritance Planning and Family Office functions; Corporate Finance specialists work on M&A, Fundraising, Equity/Debt Capital markets, Restructuring and Special Situations; Securities Trading is the bedrock of the business with the team liaising with over 150 market counterparties in Fixed Income, Bonds, Equities, FX and Commodities to provide the best pricing for clients.