Growing risks for China’s Economy

Daily Analysis - 20/12/2018

China is losing ground based on a survey


According to conclusions of a study by Deloitte, increasing vulnerabilities in China's economy are pulling down the risk appetite of senior investment managers at firms that operate in China.

Deloitte is asking its economic officials about their opinions regarding trading and business in China two times a year with a survey. When they asked to explain the shifts in sentiment over the past 6-months, a large percentage over 80% of respondents stated that their economic viewpoints are not on the positive side. William Chou, the national managing partner of the Deloitte China CFO Program, said "There has been a sharp shift in sentiment,"  in a release announcing the results, citing factors including a lack of resolution to the ongoing tariff conflict between Beijing and Washington and China's struggling stock markets.

Dollar steady after FED

On Thursday the Greenback was steady in the Asian session following the FED's moderate policy. In a generally anticipated decision, the U.S. central bank increased interest rates by 25 basis points. This is the fourth increase this year while they projecting fewer rate hikes next year. But the markets seemed shocked by the Fed's promise to maintain the focus of its plan to tighten the monetary course. This gave the impression that they are not concerned that much for the increasing uncertainty regarding global economic growth.


Oil prices resume drop

International benchmark Brent crude futures fell over $1 at $56.20 per barrel, following the rising of almost 2% the last trading session.

On Thursday Oil prices dropped to delete many of their profits from the last trading day. Later Oil continued its drops viewed earlier in the week due to concerns about oversupply and the risk for the global economy.

The front-month U.S. crude contract lost more than 2.0 %, to $47.9 per barrel negating profits made on Wednesday. "Xi Jiarui, chief oil analyst at consultancy JLC said “Wednesday's recovery was short-covering. Investors quickly moved their attention to deteriorating fundamentals in the oil markets including more signs of slowing economic growth next year, record production and the lack of confidence with OPEC's pledge to curb production."


Gold is steady while FED is giving clues for next year hikes

Today Gold was steady, following dropping more than 0.5% in the preceding trading session while the FED gave a less-dovish vision about the monetary tightening than many experts had anticipated.

Spot gold climbed 0.1% to $1,244.50 per ounce. On Wednesday the U.S. central bank increased interest rates by 25 basis points. But what shocked markets were the Fed's promise to maintain the core of its strategy to tighten monetary policy. On Thursday the U.S. gold futures sank 0.7% to $1,247.5 per ounce.


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