IMF Growth Forecast Weights on Stocks
Stock markets dropped yesterday as concerns over the trade situation and another downgrade of global growth expectations hit markets. The US administration advised that it could run the EU with more tariffs shortly and the IMF cut it’s world GDP forecast again for 2019, down to 3.3% from its predicted 3.5% in January. Stocks and risk trades were significantly down on the day with the US indices closing out trading well in the red, the Dow leading the way suffering a loss of 0.72% followed closely by the S&P and Nasdaq, down 0.61% and 0.56% respectively.
Dollar Index, Safe Haven Triggers
The dollar had a mixed day as it gained against some of the risk currencies but lost against the havens with the Dxy trading around 97.00 on the Asian open.
Soft U.S. data heightened demand for bullion. Job openings declined in February, and there was a decline in new orders for U.S.-made goods. During the previous week, the non-farm payrolls data signaled a slowdown in wage growth.
Risk Off Sentiment Triggers Bullish Bias in Commodities
Commodities were relatively stable with Oil still trading near recent highs and Gold climbing in the risk-averse environment.
The yellow metal gold rose 0.5% to $1,303.98 per ounce, having scored its highest since March 28 at $1,306.09. The primary reason is the fact that the IMF decreased global economic growth from 3.5 down to 3.3%.
Fresh Tariffs on European Union
President Donald Trump just released plans for a fresh round of U.S. tariffs on European products. The threat of further tariffs on the EU from the US will not sit well with global investor sentiment, with Europe struggling on a number of fronts and the IMF downgrading it’s European growth forecasts from 1.6% to 1.3% for the year, the added burden of further tariffs could push conditions in some member states further south.
What’s Next Today?
The UK GDP & Manufacturing Figures – Looking ahead to the rest of today’s trading sessions, the UK comes into focus early with the release of the latest GDP and Manufacturing Production numbers.
ECB Policy Meeting – Investors will then look to the continent, and the aforementioned ECB meeting as well as any updates concerning Brexit. It’s due at 11:45 (GMT) and ECB aren’t expected to change its interest rate.
US CPI Figures – During the US session, eyes will remain on the Inflation data at 12:30 (GMT). Economists are expecting a rise of 0.3% in inflation vs. 0.2% growth previously.
US FOMC Meeting Minutes – Later today at 18:00 (GMT), the Federal Reserve will release it’s a statement. Previously, the US Federal Reserve delivered a dovish twist in its March conference by indicating no rate hikes in 2019 and declaring the early terminus of the balance sheet reduction plan in September.
Chair Jerome Powell displayed concern about the global economy but looked positive about the US one. Today, the meeting minutes may cast further light on the reasoning behind a bearish move. Let’s see how it goes. That’s was all about the fundamentals, wait for the technical analysis report, we might have some exciting trades setups today.
Have a good day!