Wednesday, April 26, 2017
On 23 April 2017, France’s political map was redrawn in a historic election, in which the two political parties that have dominated the country’s political landscape over the past four decades were defeated. The world’s sixth largest economy and a powerhouse in the European Union (EU) witnessed significant changes in its political system as the voters snubbed the ruling Socialist and conservative Republicans in the first round of presidential elections.
Monday, April 24, 2017
US equities conclude a choppy week in positive territory
At the close of last week, Nasdaq, S&P 500 and Dow Jones Industrial Average were up 1.8%, 0.8% and 0.5%, respectively. US equity markets recovered from last week’s decline as investors’ focus shift away from geopolitical concerns to a flurry of earnings releases. The first quarter result season is largely expected to be positive. Equities also reacted positively to Treasury Secretary Steven Mnuchin’s assurance that the Trump administration is close to finalising major tax reforms and would soon release its proposal. Moreover, the Fed published its Beige Book ahead of the FOMC meeting, scheduled for 1-2 May. The Beige Book showed increased economic activity across all 12 districts. Meanwhile, investors continue to closely follow the series of upcoming elections in Europe and tensions around North Korea and Syria.
Wednesday, April 19, 2017
On Sunday, April 16, Turkish President Recep Tayyip Erdogan secured a narrow yet decisive victory in a referendum that awards him comprehensive supremacy in the biggest democratic overhaul in Turkish politics. According to Turkey’s state news agency, the “evet” (“yes” in Turkish) camp secured 51.2% of the votes in a tightly contested poll. However, the country’s three major cities — Ankara, Istanbul, and Izmir — voted in favour of “hay?r” (no). Although President Erdogan announced 25 million people supported the referendum, the outcome was not in line with the ruling party AK’s expectation; the party was anticipating a comfortable victory in the aggressively campaigned referendum.
Tuesday, April 18, 2017
Last week, Greece entered into a preliminary deal with creditors on economic reforms, requiring the country to incorporate pension and tax reforms. Creditors demanded Greece to pass a law that would pave the way for the implementation of these reforms, latest by 2019 and 2020, respectively. The Eurozone’s President Jeroen Dijsselbloem indicated the agreement is a giant step forward as it could lead to the IMF’s participation in the bailout program.
Uncertainty surrounding the IMF’s participation in the program had stalled Greece’s bailout talks over the last few months as some Eurozone creditors were adamant on the agency’s participation. Meanwhile, investors were getting increasingly jittery ahead of the €6 billion debt repayment due by Greece in July. This was ascribed to snail-paced progress in bailout talks weighing heavily on Greece’s ability to pay back the debt on time.
Tuesday, April 18, 2017
- US equity markets decline for second consecutive week despite upbeat earnings by banks
- European equities retreat in the short Easter week
- Domestic as well as global cues direct Asian indices downwards
Geopolitical concerns pulls the US markets lower
The Nasdaq and the S&P 500 lost 1.2% and 1.1%, respectively, while the Dow Jones Industrial Average ended 1.0% down. US equity markets started the week on a weak footing as geopolitical concerns following the US attack on Syria continued to weigh on investor sentiment. In addition, the US President Donald Trump’s assertion that “North Korea is a problem that will be taken care of”, following speculation that the country is on the verge of another nuclear test, further heightened the geopolitical concerns globally. Moreover, in a major blow to terrorist group ISIS, the US military dropped the largest non-nuclear bomb on Afghanistan, further increasing the uneasiness among investors. In the US, banks kickstarted 1Q17 earnings season, with the Citigroup, JP Morgan Chase and Wells Fargo reporting upbeat earnings.
Wednesday, April 12, 2017
Shortly after his dinner with Chinese President Xi Xinping last week, US President Donald Trump issued his most significant national security order to date; he authorized a missile attack on a Syrian airbase. The edict was in response to the Bashar al-Assad regime’s chemical attack on civilians in the rebel-held Khan Sheikhoun in Syria, which killed over 80 people, including women and children. The unexpected move from the US raised many eyebrows in global political circles. Moreover, heightened geopolitical uncertainty subsequent to the US attack on Syria, propelled the crude oil prices higher.
Monday, April 10, 2017
Late Thursday night, South Africa’s President Jacob Zuma announced a surprising decision to reshuffle the cabinet. However, the only unsurprising aspect of the reshuffle was the firing of Finance Minister Pravin Gordhan. Gordhan was replaced by Malusi Gigaba, former Minister of Home Affairs and a close associate of Zuma. Zuma and Gordhan shared an uneasy relationship; the bad blood between the two was evident on multiple occasions.
Thursday, March 23, 2017
On March 15, 2017, the US Federal Reserve (Fed) raised interest rates by a quarter percentage point from 0.75% to 1.00%. This move was in line with market expectations as many Fed policymakers had given strong indications of a possible rate hike in past few weeks. The central bank hiked rates for the first time this year, the second time in three months. The Federal Open Market Committee (FOMC) decided to increase a key policy rate citing improved labour market conditions and inflation. The central bank kept its economic projections unchanged, as Fed Chair Janet Yellen stressed that the rate hike should not be seen as an anticipatory response to forthcoming fiscal policies.
Tuesday, March 21, 2017
Most of the US equities finished the week higher as majority of the US indices ended in green. The Dow Jones Industrial Average edged up 0.1%, the NASDAQ gained 0.7% and the S&P 500 added 0.2% during the week. Most of the equities moved sideways in the first half of the week ahead of the Federal Reserve’s (Fed’s) monetary policy meeting scheduled on Wednesday. However, markets rallied following the much anticipated rate hike, the Fed raised key rates by 25 basis points to a range of 0.75% to 1%, and delivered a clear message that it believes the US economy is functioning normally.
Monday, March 20, 2017
The US initiated the process to deploy an advanced missile defense system, known as Terminal High Altitude Area Defense (THAAD), in South Korea. The action followed North Korea’s test launch of four ballistic missiles into the Sea of Japan, which was perceived as a threat to US naval bases in Japan. In view of the rising security threat following the series of missile and nuclear tests by North Korea, the US and South Korea mutually agreed to fast-track the deployment of the THAAD system. THAAD is an advanced defense missile, designed to destroy short- and medium-range ballistic missiles at a high altitude.