{"id":4072,"date":"2019-01-29T04:51:05","date_gmt":"2019-01-29T04:51:05","guid":{"rendered":"https:\/\/raizinvest.com.au\/investors\/?p=4072"},"modified":"2019-01-29T04:51:05","modified_gmt":"2019-01-29T04:51:05","slug":"market-and-economic-update-27-01-19","status":"publish","type":"post","link":"https:\/\/raizinvest.com.au\/investors\/blog\/market-and-economic-update-27-01-19\/","title":{"rendered":"Market and Economic Update – 27\/01\/19"},"content":{"rendered":"

\"Market<\/p>\n

Market update from Raiz CEO, George Lucas<\/em><\/p>\n

Global growth concerns continue<\/strong><\/h3>\n

After a fine start to the year, equity prices came under a bit of pressure early last week due to concerns about the health of the global economy and I suspect that there is more stock market weakness to come this quarter.<\/p>\n

The signals last week included official GDP data from China showing that its economy slowed in the last quarter of 2018 and the International Monetary Fund (IMF) revising down its projections for GDP growth this year and next in advanced and emerging economies.<\/p>\n

The reason for the IMF\u2019s downgrade was risks associated with trade tensions, the unwinding of fiscal stimulus in the US, downward GDP growth revisions for the euro-area.<\/p>\n

On the plus side, reports that the Federal Reserve was considering an early end to its balance sheet reduction programme helped US and European stocks end the week higher.<\/p>\n

 <\/p>\n

Market looks ahead to US-China trade talks<\/strong><\/h3>\n

At the same time as some softness in equities, the US dollar, the Japanese yen \u2013 viewed by investors as \u201csafe\u201d assets \u2013 strengthened a bit while 10-year government bond yields generally fell, particularly US Treasury yields. The market also digested a mixed batch of quarterly US stock earnings.<\/p>\n

All eyes are now on this week\u2019s US-China trade talks in Washington<\/span><\/a> and whether US Trade Representative Robert Lighthizer and US Treasury Secretary Steve Mnuchin can strike deal with the Chinese delegation led by Vice-Premier Liu He.<\/p>\n

\"US
The US will negotiate with a Chinese delegation led by Vice-Premier Liu He (right).<\/figcaption><\/figure>\n

 <\/p>\n

Draghi: Eurozone faces economic downturn<\/strong><\/h3>\n

Turning to Europe, the president of the European Central Bank (ECB), Mario Draghi, warned that weaker growth in the global economy would continue to be felt in Europe, fuelling talk of a possible shift in policy guidance.<\/p>\n

President Draghi\u2019s comments came after the ECB left its key policy settings unchanged and indicated it is unlikely to raise them until summer, acknowledging the economy still needs monetary stimulus.<\/p>\n

The ECB\u2019s language was a significant shift away from the previous \u201cbroadly balanced\u201d view of the outlook for the European economy, citing the persistence of risk factors, including trade tensions between China and the US, Brexit and a slowdown in China.<\/p>\n

What\u2019s more, while Draghi said there was no need to ease monetary policy, for now, I think the market suspects that the ECB will change the forward guidance on interest rates and unveil new targeted longer-term refinancing operations (TLTROs), before long.<\/p>\n

The outlook for the euro-zone economy has deteriorated sharply in recent months and as a result I think that the ECB will leave rates on hold this year and next.<\/p>\n

 <\/p>\n

China\u2019s economy cools in Q4<\/strong><\/h3>\n

Looking more closely at breakdown of China\u2019s Q4 GDP data, it points toward softer service sector activity on the back of slower property sales and weaker consumer spending. It\u2019s likely that services growth will come under further pressure this year, as the labour market continues to weaken and households become even more cautious.<\/p>\n

Meanwhile, in Australia, the decline in the unemployment rate to 5 per cent in December shows that the housing downturn hasn\u2019t had much of an impact on the labour market yet.<\/p>\n

 <\/p>\n

 <\/p>\n

Don\u2019t have the Raiz App?<\/strong><\/h3>\n

Download it for free in the App store or the Webapp below:<\/p>\n

\n

\"download-raiz-app\"<\/a>
Click to download the Raiz app<\/a><\/figcaption><\/figure><\/figure>\n

 <\/p>\n

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Market update from Raiz CEO, George Lucas Global growth concerns continue After a fine start to the year, equity prices came under a bit of pressure early last week due to concerns about the health of the global economy and I suspect that there is more stock market weakness to come this quarter. The signals […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[1],"tags":[],"yst_prominent_words":[1094,1095,1096,1101,1098,1097,386,1075,1076,947,297,151,940,1078,1100,1099,166,1077,1060,1102]}