Global stocks weaken in Hawkish Federal Reserve and surprising data from China



The Thursday Market Minute

  • Global stocks weaken as the Federal Reserve, reducing China's data, curtails risk appetite.
  • United States. However, the dollar softens, while investors focus on growth optimism, not inflation, in comments by Jerome Powell.
  • China's central bank does not follow the rise of the Fed as domestic investment falls to 22 years.
  • The euro rises to multiples Oil prices fall as China's weak data compensate for the drop in US reserves.

Oil prices fall as data from China falls to the bottom. ] Market Snapshot

World stocks traded sharply lower on Thursday, as investors reacted to the Federal Reserve signaling yesterday and were taken by surprise by a series of weaker than expected data from China that could suggest diverging growth paths between the two largest economies in the world.

The policy decision of the Federal Reserve, which takes as a base the 2% loan rate and markets the seventh increase since 2015, was not a surprise for investors, but the optimistic tone of President Jerome Powell during his session of questions and answers with the media, combined with a stronger outlook for growth and inflation, now point to at least two more rate hikes between now and the end of the year. [19659010] "The economy is doing very well … most people who want to find jobs are finding them, unemployment and inflation are low," Powell said. "The overall outlook for growth is still favorable." .

Interestingly, the market reaction was slightly counterintuitive, since investors have increased their bets on a rate hike in December, with Powell's emphasis on growth, as opposed to inflation, helping to weaken the index of the US dollar at about 0.25% in Asian trading to 93,465 and take yields on 10-year Treasuries from a maximum of three weeks from 3.01% to around 2.95%.

US stocks, which fell modestly last night after the Fed's hardline declaration, will extend that drop at the beginning, according to the futures prices of shares, with contracts linked to the Dow Jones Industrial Average ] pointing to a 30-point drop while those linked to the S & P 500 suggest a 3.3 point retracement for the broader benchmark.

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However, the stock market reaction in Asia was more impacted by a set of triple economic readings from China suggesting that the government's long-term goal of reducing risky lending practices is beginning to affect, with five the investment rates of the month fell to a minimum of 22 years of 6.1% and industrial production and retail sales fell much more than expected in the month of May.

The Central Bank of China, the People's Bank of China, also chose not to continue tightening the cycle, as it normally does to keep the yuan closely linked to the US dollar, and kept its short-term interest rate unchanged on the Thursday, suggesting that he is also concerned about the overall trajectory of growth in the second largest economy in the world. 19659017] "No change since the #PBoC indicates that the monetary adjustment has gone too far" @freyabeamish #PantheonMacro

– Pantheon Macro (@PantheonMacro) 14 June 2018

The coll The active reaction cut 1.1% of the MSCI Asia index without Japan, the broadest measure of share prices in the region, and helped Japan Nikkei 225 to fall 0.99 % to close at 22,736.11 points.

European stocks followed suit, with the Stoxx Europe 600 slipping 0.48% at the start of trading on Thursday as investors considered both Asia's biggest weakness and the euro's strongest strength, which rose to a maximum of several weeks of 1.1819 against the dollar before the European Central Bank policy meeting today in Latvia, capital of Riga.

ECB President Mario Draghi is expected to point out, at least in part, the Bank's intention to end its quantitative easing program of 2.55 billion dollars ($ 3 billion), which has a deadline Soft official by the end of September. that inflation of the monetary area is beginning to accelerate.

World oil prices also fell, and China's weaker data made up for yesterday's 4.14 million drop in US domestic crude stocks. UU Informed by the Energy Information Administration.

Brent crude contracts for delivery in August, the world benchmark, saw 37 cents lower since its close on Wednesday in New York and changing hands to $ 76.37 per barrel in early European operations, while WTI contracts for July were little changed to $ 66.64 per barrel.

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