On Tuesday, as European and US central banks worsened investor’s fear from the global economic point of view and protection of trade, the dollar improved while Asian shares shrunk from its prior eight-month high.
As the Sino-US trade clash continues to be unsettled in a fresh growth of tensions, the United States President Donald Trump warned the European Union of new tariffs on goods.
Since last August’s peak, the MSCI’s broadest index of Asia-Pacific shares outside, dropped 0.3 percent. The Hang Seng index in Hong Kong slipped 0.6 percent while the blue-chip CSI300 of China declined 1 percent and Chinese shares were subdued.
After the country’s prime minister called a national election for May 18, pressure rises because of the political uncertainty with Australian shares falling behind.
The yen strengthened while Japan Nikkei stumbled at 0.3 percent.
A Sydney-based analyst at Rakuten Securities Australia stated, “It has been another mixed day in the market with investors still searching for the next push one way or the other and the majority of products are trading at familiar levels.”
In addition, “Traders continue to operate in a ‘wait and watch’ mode as they look for the next opportunity in a cautious market. Two big event risks are now behind us with the ECB and Fed.”
As the European Central Bank retained its loose policy stand, threats in the global economic growth remained when announced on Wednesday. The postponement of the ECB’s first post-crisis interest rate hike pushed through.
Prospect for more backing was raised by President Mario Draghi as struggles and slowdown in the euro zone economy persisted.
An analyst at Capital Economics wrote in a note, “If, as we expect, growth in the euro-zone continues to disappoint over the coming months, we think that ECB policymakers will adopt an even more accommodative stance.”
In March, US consumer prices improved in the previous 14 months as shown on a separate data. Meanwhile, an environment of a slowing global economic growth remained as inflation continues.
Officials agreed with the new interest rate policy after the Federal Reserve’s meeting last March 19-20 as the US economy expects a resistance in the global slowdown in the next few years without a recession.
In response with the Fed supporting holding rates steady or possibly cutting the by the end of the year, the U.S. Treasury yields stumbled.
On the US stock index, the S&P500 grew 0.35 percent, the Nasdaq ascended 0.7 percent and the Dow was barely changed.
An economist stated, “There were big worries last year that central banks globally are moving towards policy tightening. Those fears have reversed now.”
Another person said, “That is a reasonably positive backdrop for equities, the complication is the growth slowdown.”
However, he said, help is emerging and encouraging economic signs by the “great retreat” on policy by global central banks in the China and progress in Sino-U.S. trade talks.
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Categories: Stock Market