Brent rose above $80 per barrel Oil prices have been rising for the fifth consecutive auction due to concerns about possible supply disruptions amid the escalation of the conflict in the Middle East. Barbara Lambrecht, commodity analyst at Commerzbank, noted that geopolitical tensions could intensify at any moment, which would put additional pressure on price growth. Geopolitical risks are likely to remain a key factor influencing oil price trends. The data published last week in the United States turned out to be better than forecasts, which reduced concerns about a possible recession in the country's economy. These data reinforced traders' confidence that the Federal Reserve could cut interest rates as early as next month, which in turn could boost fuel demand. The current price of Brent crude oil is $80.30 per barrel. North American WTI oil is trading near the level of $77.70. Over the past week, Brent has risen by 3.7%, and WTI — by 4.5%, ending the first of five weeks in the «plus». More news on our website: https://bit.ly/4a81506
German companies continue to invest in China German companies continue to invest heavily in China, despite government calls to diversify risks. According to the Bundesbank, Germany's direct investments in China in the first half of 2023 reached 7.3 billion euros, which is almost one and a half times more than in the whole of 2022. Experts note that a significant part of investments is directed to reinvest profits earned in China. Last year, German businesses reinvested more than half of the 19 billion euros of profits earned in China. Localization of production in China is becoming an increasingly popular strategy for German companies seeking to reduce risks in their supply chains. However, this strategy could have a negative impact on the German economy by reducing exports and creating dependence on the Chinese labor market. The German government recommends that companies diversify their investments and sales markets, but does not call for a complete cessation of cooperation with China. Despite this, major automakers such as Volkswagen and BMW continue to invest heavily in China. In the last five years, Germany has been the leader in terms of EU investments in China, which indicates the continued attractiveness of the Chinese market for German businesses. More news on our website: https://bit.ly/4a81506
JPMorgan: EM shares will benefit from the slowdown in the US economy JPMorgan forecasts favorable prospects for emerging market (EM) stocks amid an expected slowdown in U.S. economic growth and lower interest rates in the second half of 2024. Analysts believe that these factors will have a positive impact on the comparative performance of EM shares due to differences in growth rates and interest rates. Experts believe that adjusting expectations regarding rates and growth in the United States will lead to a higher valuation of EM shares in global investment strategies. However, they warn of risks, including economic downturns, market instability and the impact of the upcoming U.S. elections on international trade and investment risks. The growth gap between EM countries and developed markets (DM) is expected to widen to 2.7% in 2024, compared with 2.5% in 2023. The Fed's rate cut may create opportunities for monetary policy easing in the EM. Other factors boosting the attractiveness of EM stocks include limited investments in the sector, attractive prices, diversification strategies from U.S. stocks, and a weakening U.S. dollar. The historically slowing but resilient U.S. economy is favorable for EM stocks. During periods of Fed rate cuts, EM stocks usually perform better: the average decline is 11% for EM, 15% for DM and 13% for the US. More news on our website: https://bit.ly/4a81506
The yuan is rising amid a weakening dollar On Monday, the yuan showed the most significant growth in two weeks, reaching 7.1363 per dollar, which is 0.4% higher than the previous day. This increase, the largest since the beginning of August, is due to the weakening of the dollar and expectations of lower interest rates in the United States. However, the yuan lost ground against the resurgent yen, falling 1% to 20.38 yen, which was the strongest drop since August 5. As a result, the yuan fell to 98.07 against a basket of trading partner currencies, the lowest level since January 15. Traders are waiting for the announcement of the base rate on loans in China on Tuesday. The collapse of bank lending, falling housing prices and gloomy economic sentiment, according to analysts, will not allow the currency to grow significantly further. The yield on 10-year Chinese government bonds fell by 1.8 basis points to 2.17%, while the yield on similar benchmark U.S. government debt was 3.9%. The 7-day repo rate for the yuan in the domestic market was 1.74%, and in the futures market, the 3-month yuan was quoted at 7.0695, 722 points higher than the spot rate. Three-month forward contracts on CNH were trading at 7.0682 per dollar. The People's Bank of China has set the average rate around which the yuan can trade in the 2% range at 7.1415 per dollar. More news on our website: https://bit.ly/4a81506
S&P 500: the forecast for 5600 points remains Analysts maintained an optimistic outlook for the S&P 500 index, expecting it to rise to 5600 points by the end of the year. The strong result of the second quarter, when the profits of S&P 500 companies increased by 10.5% year-on-year, exceeding the forecast of 8.1%, became the basis for such a positive attitude. Seven major technology companies contributed significantly to this growth, increasing earnings per share by 38%. It is important to note that the remaining 493 S&P 500 companies also showed positive profit growth, which is the first time in the last six quarters. Despite the good performance, profit growth forecasts for the second half of the year were slightly adjusted down to 10% y/y. Analysts note the risks to the market, in particular, rising unemployment and the likelihood of a recession. Nevertheless, they believe that reducing the dependence of the index's income on cyclical sectors may provide some stability. The consensus forecast for earnings per share (EPS) for 2024 coincides with analysts' estimate of $250, which supports the target for the S&P 500 at the end of the year. Analysts have expressed doubts about the ambitious forecast for profit growth of 15% in 2025, offering a more cautious forecast in the area of high single-digit percentage growth rates. Despite these considerations, analysts remain positive about the market and confirm their year-end S&P 500 target at 5,600. More news on our website: https://bit.ly/4a81506
Chinese banks have increased assets by 7% According to Xiao Yuanqi, Deputy head of the State Administration for Financial Supervision and Control of the People's Republic of China, the total assets of the Chinese banking sector at the end of July amounted to 423.8 trillion yuan ($59.4 billion), an increase of 7% compared to the same period last year. Positive trends are also observed in the field of credit quality: the share of non-performing loans decreased by 8 basis points to 1.61%. The equity capital adequacy ratio of banks in the first half of the year reached 15.53%, which indicates the high strength of the industry and its ability to withstand risks, Xinhua news agency reports. Xiao Yuan qi stressed that the GUF will continue to support banks in optimizing the structure of assets and liabilities, as well as in finding new sources of profit growth to increase profitability. More news on our website: https://bit.ly/4a81506
Powell's performance was a turning point for gold The gold market is once again reaching record highs, exceeding the mark of $2,560 per ounce. This upward movement in the market was provoked by a speech by Fed Chairman Jerome Powell in Jackson Hole, where he made it clear that the Fed is ready to lower interest rates. Lower Treasury bond yields, a weaker dollar and increased investment in exchange-traded funds investing in gold (ETFs) create a favorable environment for gold prices to rise. These factors, which previously inhibited the growth of the value of gold, can now become a powerful incentive for it. Jay Hatfield, chief executive officer of Infrastructure Capital Advisors, notes that the expectation of interest rate cuts from the Fed was a turning point for gold. He emphasizes that previously everyone believed that the Fed would be the last to cut rates, but now the situation has changed. This year, gold has shown impressive growth, setting new records and occupying one of the leading positions among the main commodities. More news on our website: https://bit.ly/4a81506
The dollar is recovering after the fall On Thursday, the US dollar recovered from its recent fall, rebounding from a 13-month low. The dollar index, which tracks the USD exchange rate against a basket of six other currencies, rose 0.2% to 101.182. The recovery of the exchange rate is associated with an increase in demand for the dollar as a "safe currency" amid worsening geopolitical problems in the Middle East, as well as concerns about the resumption of trade disputes between China and the West. However, the dollar is still under pressure due to the expected reduction in US interest rates next month. In August, the dollar fell by about 2.9%, which was the sharpest drop in the last nine months. Preliminary GDP data showed the resilience of the American economy, fueling hopes for a soft landing. But the latest data also revealed a weakening of the labor market. Data on the PCE price index, which is the Fed's preferred measure of inflation, will be released on Friday and is likely to affect interest rate forecasts. More news on our website: https://bit.ly/4a81506
China is changing the game: new challenges for the global economy China, long considered the engine of the global economy, is now experiencing a decline in consumer confidence and spending cuts. The problems of the real estate market, the weakness of the labor market and the fall in stock prices exacerbate the situation, reducing household well-being and leading to a decrease in confidence in the economy. As a result, the trend towards reducing consumer spending is strengthening, which is especially alarming, since China's economic growth is increasingly dependent on domestic consumption. A weak labor market is a special factor that causes panic and encourages people to stick to conservative measures more. New savings are growing and spending is declining, creating a vicious circle of low confidence and an economically stagnant situation. It is worth noting that the change in sentiment in China has negative consequences for the global economy. A decrease in import demand leads to a slowdown in global growth. An excess of goods creates deflationary risks, and the retail sales sector is experiencing serious difficulties. Chinese consumers are becoming cautious, which negatively affects the financial results of the world's leading brands, especially those focused on the Chinese market. Instead of stimulating growth, the Chinese government pays great attention to regulation, preferring the sustainability of expansion. More news on our website: https://bit.ly/4a81506
Experts: Bitcoin and Ethereum have no future The period of bitcoin's rapid growth seems to have come to an unexpected end. Many experts and investors are convinced that a further rise in BTC should not be expected. This opinion reflects the current pessimistic sentiment in the cryptocurrency market. The beginning of the year was marked by general euphoria, when memecoins were considered as a new investment opportunity, and some digital assets predicted an increase of 50 times. However, today, in the face of general skepticism, even moderate forecasts seem too optimistic. The volatility of the cryptocurrency market has long been known: sharp ups are often replaced by collapses. However, despite the pessimistic forecasts, there is also a positive trend. Thus, Zürcher Cantonalbank, one of the largest banks in Switzerland, has provided its customers with the opportunity to trade and store bitcoin and Ethereum through mobile applications. This happened on September 4 in cooperation with Crypto Finance, regulated by FINMA. The example of ZKB demonstrates that despite the current difficulties, the process of accepting cryptocurrencies in the financial world continues. In Switzerland, the attitude towards digital assets remains positive, which strengthens their position in the global market. In general, although the short-term prospects may look disappointing, the long-term adoption of cryptocurrencies and the participation of traditional financial institutions in them indicate their significant potential and sustainability. More news on our website: https://bit.ly/4a81506
