G20 falls short of expectations : 29.02.2016
On Friday and Saturday Feb 26-27 the G20 meeting took place in Shanghai. Investors all over the world highly anticipated some hints on actions to support the global economic growth and fight existing economic risks. However, financial ministers and central bankers did not come up with any coordinated idea how to spur the global economic growth having agreed only on using “all policy tools – monetary, fiscal and structural – individually and collectively” to pursue the economic goals.
US stocks retreated on Friday on fresh concerns over the interest rate hike in the US. Now the Fed fund futures price in a 36% chance of the June rate hike and the 53% of the December rate hike. The S&P 500 index dipped 0.19% to 1,948.05, the Dow Jones Industrial Average lost 0.34% while Nasdaq 100 composite closed 0.18% higher. The S&P 500 utilities were the bottom performers having lost 2.73%. On the other hand, the materials rose 1.35% leading the growth. For the week the US indices added from 1.5% to 1.9% each. US dollar index lost 0.1% against a basket of six major currencies following its active growth on Friday on the strong US Q4 GDP data. The trading volume on the US exchanges was at 7.9bn shares which is below the 8.9bn average for the last 20 trading days. Today at 16:00 CET the January pending home sales will come out in the US, the tentative outlook is positive.
European stocks edged lower today after the G20 meeting this weekend. During the two-day meeting financial ministers did not decide on coordinated steps to improve the global economic situation. The February headline inflation fell in EU from 0.3% in the previous month to -0.2% which made investors expect another round of monetary stimulus from ECB on its meeting on March 10. The pan-European FTSEurofirst 300 index lost 1%, the Germany’s Dax 30 index fell 1.5%, the Britain’s FTSE 100 fell 0.8%. The British pound slumped to the 7-year low of $1.3841 on Brexit concerns. The EURUSD pair fell to a three-week low of $1.0940 on Friday. No more significant economic data expected today in EU.
Chinese stocks fell around 3% to the 4-week lows with CSI300 index down 2.5% and Shanghai Composite down 2.9%. The Japan’s Nikkei dipped 1% amid stronger yen and the retreated Chinese market. It has already tumbled 8.5% this month. As a result, the Japanese exporters suffered. USDJPY slumped 1% to 112.90 per dollar as investors rushed to the safe-haven yean given the stock markets selloff.
Oil futures prices were on the rise on rumours the market bottom might have been reached already. The Baker Hughes data on Friday showed the active oil rigs count fell from 413 to 400. Brent crude gained 17 cents to $35.27 a barrel already 18% up from February 11 when it last fell below $30. US crude futures fell on the contrary 12 cents to $32.66 a barrel, 27% up from February 11.
Gold is edging up amid the poor performance of global stock indices acting as a safe-haven asset. Spot gold rose 0.7% to $1,233 an ounce today and already 10% in February while gold futures for April delivery edged up by 1.2% to $1,234. Gold has already hit the year high of $ 1,260 earlier this month on falling probability of the US interest rates hike.