Euphoria Drives Investor’s Sentiment

Daily Analysis - 24/01/2018

Global Growth, Earnings Season and  Demand on Oil Prices

global-markets-on-the-rise


Major central banks are expected to move away from stimulus and ultra-easy monetary policy this year, but borrowing costs are still accommodative and could underpin growth.

The latest Reuters polls taken this month, covering more than 45 countries, not only underscored optimism on growth but also showed inflation forecasts were either upgraded or left unchanged in nearly 70 percent of those economies.

2018 Global Growth to Hit the Highest Level in Eight Years


The momentum is ticking higher. The global economy is expected to grow at a robust pace this year and reach levels not seen since 2010, as momentum builds in developed economies and inflation revives, Reuters polls of over 500 economists showed.

Major central banks are expected to move away from stimulus and ultra-easy monetary policy this year, but borrowing costs are still accommodative and could underpin growth.

The latest Reuters polls taken this month, covering more than 45 countries, not only underscored optimism on growth but also showed inflation forecasts were either upgraded or left unchanged in nearly 70 percent of those economies.

The global economy is predicted to grow 3.7 percent this year, the fastest since the 4.3 percent in 2010. The International Monetary Fund’s outlook for 2018 is at 3.9 percent growth.

Among analysts global economic boom is more likely to gain momentum this year and push inflation higher. Expectations are driven by growth in developed economies, particularly the euro zone and the United States.

Surging business and consumer confidence and steady job creation have left economists repeatedly raising growth estimates for the euro zone and its major economies.

The rising euro poses a threat in Europe and could challenge the European Central Bank as it moves to end its money printing by the end of the year. Tomorrow the ECB policy meeting is highly anticipated as we may get hints on when we may get changes, as well as how strong the possibility for a clear QE-end in September is.

 

popup_close
eurusd-d1-alvexo-ltd

Nasdaq and S&P 500 Close at Record Highs


The Nasdaq composite closed at a record high on Tuesday. Netflix announced earnings on Monday after the market closed, surprising investors, where the shares surged on stronger-than-expected subscriber growth.

The video streaming giant said Monday after the close that total net adds reached 8.33 million where the estimate of analysts was 6.39 million. The stock of Netflix surged 11 percent, lifting the company's market cap above $100 billion for the first time.

The Nasdaq finished 0.7 percent higher at 7,460.29.

The Q4 earnings calendar season is off to a good start. As of yesterday, 76% of the S&P 500 companies that had reported surpassed earnings expectations, while 84% of those companies had beaten sales estimates, according to Thomson Reuters I/B/E/S.

 

popup_close
nsdq-mar18-d1-alvexo-ltd

Crude Oil Inventories Carry more Weight


As almost every Wednesday the announcement of the Crude oil inventories in the US gets the focus of commodity traders.

U.S. West Texas Intermediate (WTI) crude futures increased 2% to $64.75 a barrel.

U.S. data could show an increase in crude stocks putting pressure on their prices.

As per the American Petroleum Institute said on Tuesday that crude inventories rose by 4.8 million barrels last week to 416.2 million, after nine weeks of declines.

Refinery profits for the gasoline, a substitute to the oil, have been pulled down by oversupply in Asia, reaching the lowest level since 2015.

On the other hand, traders believe oil prices are unlikely to tumble far as markets remain supported by healthy economic growth, as well as from supply restrictions led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia last November.

Economic growth is translating into healthy oil demand growth, which comes at a time that OPEC and Russia lead production cuts aimed at tightening the market and propping up prices. The deal to withhold output started in January last year and is currently set to last through 2018.

In the latest sign of robust global economic growth, Japanese manufacturing activity expanded at the fastest pace in almost four years in January, according to a survey showed on Wednesday.

 

popup_close
cl-mar18-d1-alvexo-ltd

Upcoming Events

  • Time
  • Currency
  • Event
  • Forecast
  • Previous
  • 8:30 GMT
  • EUR
  • German Manufacturing PMI (Jan)
  • 63.0
  • 63.3
  • 9:30 GMT
  • GBP
  • Average Earnings Index +Bonus (Nov)
  • 2.5%
  • 2.5%
  • 9:30 GMT
  • GBP
  • Claimant Count Change (Dec)
  • 5.4k
  • 5.9K
  • 15:00 GMT
  • USD
  • Existing Home Sales (Dec)
  • 5.70M
  • 5.81M
  • 15:30 GMT
  • USD
  • Crude Oil Inventories
  • -3.536M
  • -6.861M
  • 21:45 GMT
  • NZD
  • Consumer Price Index (QoQ) (Q4)
  • 0.4%
  • 0.5%

Risk Warning : CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money