Trade war between US and China could kill global economy

Daily Analysis - 10/10/2018

Trade tensions could trigger another world financial crisis


The International Monetary Fund cautioned that tensions between the US and China, the two economic giants are rising and with that, risks are also growing in the global economic system. A further increase in trade tensions could force the situation to become worse.

Investors are satisfied, nevertheless, according to the IMF's newest Global Financial Stability Statement, which was published on Wednesday. The statement is published twice a year and covers the fund's estimation of global financial health and highlights dangers in the system. ," The fund said in the report "A further escalation of trade tensions, as well as rising geopolitical risks and policy uncertainty in major economies, could lead to a sudden deterioration in risk sentiment, triggering a broad-based correction in global capital markets and a sharp tightening of global financial conditions.

The IMF downgraded its global economic growth forecasts for Oil

On Wednesday after the International Monetary Fund lowered its global economic growth forecasts for 2018 and 2019, Oil prices went lower yet prices were supported as Hurricane Michael went towards Florida, causing the close down of almost 40% of U.S. Gulf of Mexico crude output. U.S. West Texas Intermediate crude moved downward by 34 cents, or 0.49%, at $74.61 a barrel, after climbing nearly 1% in the early session. Brent crude futures moved down 21 cents at $84.78 a barrel following a 1.3% increase on Tuesday.


European stocks set to start somewhat lower

On Wednesday morning, European stocks are to begin somewhat lower as investors analyze the newest political developments in Italy.

Germany's DAX under 14 points at 11,966, the French CAC down by 6 points at 5,313 Britain's FTSE 100 was trading at 16 points below at 7,221, and the Italian FTSE MIB 33 points lower at 19,969, according to IG index data. Investors are closely watching the political situation in Italy, as concerns remain among Rome and the European Union over the country's 2019 budget.


South Africa is now better than before

South Africa's financial markets are concerned about the Political turmoil in the country but the country's central bank requires investors to understand that economic fundamentals remain in a good positive sentiment. Positive developments in the current account deficit and budget deficit as well as a positive net international investment position, give us clues to further development in the correct direction. South African Reserve Bank Governor Lesetja Kganyago said the economy has recovered from a few years ago. On Wednesday Kganyago told CNBC at the International Monetary Fund's annual meeting," I'm not saying we are not vulnerable, I'm saying that we are less vulnerable."


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