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Poor Global Growth Outlook drive Global Equity & Commodity

Poor Global Growth Outlook drive Global Equity & Commodity

 Gold Soared & Crude Plunged & equity remain volatile

Gold soared to a 2-week high & selloff of crude oil remained amidst concerns over Germany`s economic outlook. Disappointing trade statistics in the Germany raised concerns that the biggest Eurozone economy might be heading to recession. US indices plunged between 2.7% to 4.5%, with S & P 500 & Nasdaq suffering their worst weekly cuts since May 2012 on concern about the Federal Reserve’s eventual cuts to stimulus, as well as worries about weak growth worldwide and its potential effect on U.S. earnings. European markets lost anywhere between 3%-5%. Asia was mixed, with Hang Seng and Shanghai gaining modestly while other markets fell between 1%-3%.

 Global growth a rising concern

 The IMF downgraded its global growth forecast for 2014 to 3.3%, down 0.1% from its July forecast. For 2015, the growth is expected to be 3.8%. Organization for Economic Cooperation and Development (OECD) said it expects the euro zone economy to slow over the coming months.

German industrial output fell by 4% in August, marking the worst fall in five-and-a-half years. This came a day after the country’s industrial orders had their largest monthly decline since the global financial crisis in 2009. Later in the week, German foreign trade data showed its biggest fall for five and a half years in August. Rating agency Standard & Poor’s downgraded its outlook for France to negative from stable on Friday. The exports contracted – 5.8%, the biggest drop since January 2009. And imports also shrank by -1.3%, narrowing the trade surplus to 17.5B euro

Bank of Italy reported that bad loans at Italian banks had grown by 20% in August to a record high. August industrial production for France came in flat on the previous month, below estimates. Comparative figures for Italy showed a 0.3% rise, but also missed expectations.

China’s HSBC Services PMI for September came in at 53.5, down from 54.1 in August. The IMF upgraded India’s FY15 GDP growth to 5.6% from the interim forecast of 5.4% made in July and estimates FY16 growth to be at 6.4%.

Focus is back to US corporate Earning & Europe

In the US, the focus would be on earning season which picks up next week as growing worries over Europe and other overseas economies have raised concerns that US companies will forecast weakness. Should results prove strong, however, the season may stem the recent selling. Three of the largest US banks in assets, viz. JP Morgan Chase, Citigroup and Wells Fargo will report on Tuesday along with tech bellwether Intel and drug and consumer products giant Johnson & Johnson. Bank of America reports on Wednesday followed by Google and eBay on Thursday .Key economic reports to watch would be September Producer Price Index and retail sales on Wednesday and consumer sentiment along with housing starts on Friday.

Europe was the key source of concern this week and would continue to be in focus next week. France will present its budget before the European Council for approval next week which is likely to be rejected as it proposes a budget deficit of 4.3% as against the target of 3%. Final reading on Eurozone inflation would be released on Thursday. Eurozone industrial production for august and Germany’s ZEW economic sentiment index for October would come out on Tuesday.

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One Comment to Poor Global Growth Outlook drive Global Equity & Commodity

  1. […] Poor Global Growth Outlook drive Global Equity & Commodity. Gold Soared & Crude Plunged & equity remain volatile  […]

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