GLOBAL NEWS-
The dollar was hamstrung versus its rivals on Thursday, restrained by concerns over global growth, the U.S. government shutdown and a yet-unresolved U.S.-Sino trade dispute.Trade tensions are the most dominant factor for investor sentiment right now and will drive market flows.The partial U.S. government shutdown, now in its 34th day has hurt investor sentiment.
The Trump administration ratcheted up pressure on Venezuelan President Nicolas Maduro on Wednesday, signaling potential new sanctions against the country’s vital oil sector as it recognized Venezuela’s opposition leader as interim president.Multiple sources said the Trump administration could impose new U.S. sanctions on Venezuela’s oil industry as soon as this week.U.S. officials are considering a range of potential measures, including restricting U.S. imports of Venezuelan oil or even a full ban, but no final decisions have been made, two people familiar with the matter told.
Japan’s manufacturing growth stalled in January as export orders fell at the fastest pace in 2-1/2 years and companies cut back production, a preliminary business survey showed on Thursday.The first, grim snapshot of the world’s third-largest economy in the new year is likely to heighten worries about slowing global growth as the Sino-U.S. trade war grinds on.Chances had already been growing that Japan could slide into a recession this year, with cooling demand at home and abroad and a sales tax hike planned for October, according to a Reuters poll of economists last week.The Flash Markit/Nikkei Japan Manufacturing Purchasing Managers’ Index (PMI) fell to 50.0 in January on a seasonally adjusted basis from a final 52.6 in December.
The Reserve Bank of India (RBI) will change its stance to ‘neutral’ next month and cut interest rates in June at the latest.Just a month ago, economists predicted rates would start rising next quarter. But they have flipped that outlook in the first survey taken since RBI Governor Urjit Patel’s sudden resignation on December 10.“The policy outlook has been muddied by the resignation of Urjit Patel. His replacement, Shaktikanta Das, will likely lend a sympathetic ear to the government’s wishes to keep policy loose.Growth, while expected to cool compared with a survey three months ago, is still likely to remain stronger than in China, Asia’s biggest economy.Uncertainty over the outcome of a national election in May is see as the main downside risk to Asia’s third-largest economy.
Philippine economic growth slipped to the lowest annual pace in three years in 2018, though it edged up in the fourth quarter, giving the central bank little reason to resume hiking interest rates.The Southeast Asian country posted full-year growth of 6.2 percent, below the government’s downwardly revised target of 6.5-6.9 percent but still one of the fastest paces in Asia. Annual growth in October-December was 6.1 percent compared with the previous quarter’s revised 6.0 percent, but slightly weaker than the 6.2 percent projected in a Reuters poll. The economy grew 6.5 percent in the last three months of 2017.But Capital Economics called the chance of sustained rebound in growth in 2019 “slim”, partly because government infrastructure spending is set to increase at a slower pace.
Asian shares were subdued on Thursday as political uncertainty in the United States and worries about weakening global economic growth left investors wary of riskier assets.MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.1 percent. It has gained 3.7 percent so far this year.Australian shares were flat while Japan’s Nikkei was last down almost half a percent after moving between positive and negative territory. China’s blue-chip CSI300 shed 0.3 percent while Hong Kong’s Hang Seng Index gave up two-tenths of a percent.But gains were capped by uncertainty over the partial U.S. government shutdown, slowing global economic growth and the yet-unresolved trade standoff between the United States and China.
China risks being locked out of talks to establish new global rules to govern the $25 trillion e-commerce marketplace as the U.S. and other nations resist an effort by Beijing to curb the plan’s ambition. Negotiations, which are set to be launched on Friday on the sidelines of the World Economic Forum’s annual meeting in Davos, seek to establish a baseline international regime for modern trade, reduce cross-border hurdles to e-commerce and cut costs, said the people, who asked not to be identified because talks are ongoing. The accord seeks to re-invigorate the World Trade Organization’s stalled e-commerce agenda amid criticism from U.S. President Donald Trump that the institution has become irrelevant and has failed to cope with China’s rise.
China's economy can maintain sustainable rates of growth despite global uncertainties, Vice President Wang Qishan said on Wednesday, days after the world's second-largest economy posted its weakest expansion in nearly three decades.In a remark apparently aimed at the United States, Wang also urged countries to uphold multilateralism and "respect the independent choices" of each other on technological innovation."There will be a lot of uncertainties in 2019, but China's economy will continue to achieve sustainable growth," Wang told delegates at the World Economic Forum in Davos.
The prospect of a delayed Brexit may be pushing up the pound, but it’s not the best news for the U.K. economy.Sterling has rallied above $1.30 this week amid increasing signs of support from lawmakers across Parliament for extending the negotiating period set to expire on March 29. While that would remove the imminent possibility of a chaotic no-deal scenario, it would leave the U.K. worse off than if Parliament accepted Prime Minister Theresa May’s current plan, according to economists.
British finance minister Philip Hammond will try to convince business leaders at the World Economic Forum in Davos, Switzerland, to continue to invest in the country after Brexit, when he addresses them later on Thursday."Britain is a great place to do business. And we are determined, as we leave the EU, to make sure it remains that way," Hammond is due to tell an event hosted by the Confederation of British Industry.
The European Central Bank is all but certain to keep policy unchanged on Thursday but may acknowledge a sharp slowdown in growth, raising the prospect that any further policy normalization could be delayed.The ECB last month ended a landmark 2.6 trillion euro ($2.96 trillion) bond purchase scheme and maintained its guidance that an interest rate hike is likely late this year.But growth appears weaker than thought just a few weeks ago, suggesting that its next move could even be an easing of policy rather than a tightening.
Germany, France and Italy, the euro zone's biggest economies, barely grew in the fourth quarter and ECB President Mario Draghi has already acknowledged that the slowdown could be longer than expected, setting up the ECB for a dovish meeting.With much of its firepower depleted, Draghi will use his few remaining tools sparingly, suggesting Thursday's meeting will be more about words than action.
Australian employment jumped again in December and the jobless rate surprisingly fell, a generally upbeat report that should comfort the central bank as the labour market remains one of the strongest parts of the economy.Figures from the Australian Bureau of Statistics (ABS) on Thursday showed a net 21,600 new jobs were created in December, down from an upwardly revised 39,000 the month before but surpassing market forecasts of a 16,500 increase.
The overall trend in Australia’s labour market has been robust over the past couple of years with annual job growth of 2.2 percent, faster than the 1.6 percent rise in population. Full-time positions expanded by almost 2 percent in 2018. Thursday’s data will be welcomed by policymakers who are counting on labour market strength for a long-awaited pick up in wage growth and inflation in the face of a downturn in the property market.
Gold prices rose on Thursday as the dollar declined due to concerns the prolonged U.S. government shutdown will limit economic growth at the same global growth is slowing as well.Spot gold was up 0.1 percent at $1,283.31 per ounce, while U.S. gold futures were down 0.1 percent at $1,282.60 per ounce.a weaker U.S. dollar for the moment, which is in general supportive for gold.The issue for gold is there is a very heavy resistance seen around $1,290 and $1,310. A further weakening of the U.S. dollar could be supportive. But, we need something to really push gold through the resistance level.
Oil prices declined on Thursday amid lingering concerns over slowing global economic growth that may limit fuel demand and after a surprise build in U.S. crude inventories. International Brent crude oil futures LCOc1 were at $60.89 a barrel,down 25 cents, or 0.4 percent, from their last settlement, having closed down 0.6 percent in the previous session.U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $52.40 per barrel, 22 cents lower from their last settlement. Crude oil came under further pressure as concerns of faltering global growth remained at the forefront in investor’s minds.
Crude inventories rose by 6.6 million barrels in the week ended Jan. 18 to 443.6 million, compared with analysts’ expectations for a decrease of 42,000 barrels, the API said. Refinery runs fell by 152,000 barrels per day.“Sharp production cuts by OPEC+ have kept crude oil futures supported however as market reports indicate for a marked output reduction in Dec 2018.Though oil prices have demonstrated for higher upside potential in the first quarter of 2019, mounting economic challenges will continue to impede exponential gains in the longer term.