Weekly Market Review - August 12-16
As of late Friday, global stock markets declined over the week as trade tensions and slowing global economy force investors to consider safe-haven assets like gold and digital assets.
The yield of the US Treasury note with 10-year maturity fell to 1.54% from 1.70% of the previous week.
Oil prices slightly rose over the week. Thus, a barrel of West Texas Intermediate (WTI) crude increased by 60 cents to $54.86.
In the crypto market, Bitcoin declined below $10,000 for the first time this month as Trump announced that the US would delay some of the tariffs for imports from China.
Sino-US Trade War Eases
The US-China trade war continues to make the headlines. However, at this time the tensions have eased as the US announced that it would postpone the imposition of tariffs until the holiday season. On the other side, China maintained its tough stance by saying it would take all possible measures to counter the US tariffs. The negotiations between the representatives of the two countries are expected to restart at the end of the month. Donald Trump hinted that the trade war would end soon as the negotiators have some positive talks during the week.
Hong Kong Govt Cuts GDP Growth Outlook
The government of Hong Kong said that it would cut its outlook for gross domestic product (GDP) growth this year to up to 1% from the previous forecast of up to 3%. The weakening economy is caused by ongoing mass demonstrations triggered by the extradition bill. The protestors occupied Hong Kong’s airport, causing the interruption of the city’s air traffic. The government revealed that it would implement an economic support package of $2.4 billion to compensate the losses.
ECB Might Come With Aggressive Easing Measures
A member of the European Central Bank’s governing council told the Wall Street Journal (WSJ) that the bank would implement an aggressive package of more stimulus measures. The ECB members should meet this September and decide on the monetary policy amid Brexit uncertainty and trade tensions. In this context, Finnish central banker Olli Rehn told the press that the ECB was ready for easing measures that would surprise investors. His remarks have driven the uptrend in the global bond market.
Malaysia’s Economy Grows by 4.9% Y/Y
Malaysia’s GDP grew 4.9% in the second quarter compared to the same period of 2018, according to the central bank. Thus, Malaysia became the first major economy in Southeast Asia to record an economic acceleration in the three months through March. Analysts polled by Reuters expected a GDP growth reading at 4.8%. In the previous quarter, the economy grew 4.5% year-on-year. The central bank left its annual growth target unchanged at 4.3-4.8% but warned that a potential escalation in Sino-US trade tensions might knock 0.1% off the economic growth.
US Housing Starts Decline Below Expectations
Homebuilding in the US declined in July for the third month in a row fueled by a drop in the building of multi-family houses. Nevertheless, a surge in building permits to the highest level since February maintains hopes for stagnating housing market. On Friday, the Commerce Department said that housing starts fell 4.0% to a seasonally adjusted annual rate of 1.191 million units in July. June data was revised down to show a negative pace of 1.241 million units from 1.253 million units as initially reported. Analysts expected the starts to increase to 1.257 million units in July.
Global Economy Outlook Declines
The forecast for the global economy worsened amid trade tensions between the US and China, according to Germany’s Ifo institute. The think-tank surveyed over 1,200 economic experts from more than 110 countries around the world. As per Ifo President Clemens Fuest, the experts anticipate slower growth in world trade, private consumption, investment activity. On top of that, respondents expect lower interest rates.
Upcoming News to Watch
On Monday, Japan will report on its trade balance while the eurozone will release the consumer price index.
Canada will also report on its inflation on Tuesday. During the same day, the US Fed will present its minutes of July meeting, giving investors more hints on whether the central bank is keen to adopt more stimulus through lower rates.
On Thursday, the European Central bank will also present the minutes of its July meeting.
The week will end with Canada’s retail sales index and the change in US new home sales.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets. Learn more.