Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

FTSE Rallies On Global Economic Recovery Optimism

Published 10/08/2020, 08:53
Updated 14/12/2017, 10:25

The FTSE, along with its European peers are pointing to a stronger start, boosted by upbeat data from the US and China. However, gains could remain capped in a quiet day for corporate releases and as the focus remains on US lawmaker’s ability to agree additional stimulus.

Chinese CPI rises

China’s consumer inflation accelerated for a second straight month in July. The CPI inflation gauge grew 2.7% yoy in July, up from 2.5% in June. On a monthly basis, prices increase 0.6%. Official data also showed that PPI which measures inflation at factory level rose 0.4% month on month.

The data adds to mounting evidence that the economic recovery in China is not only solid, but also gaining momentum, boosting optimism that the world’s second largest economy will offer serious support to the global economic recovery.

The data comes following Friday’s better than forecast non-farm payroll data. 1.7 million new jobs were created in the US in July and after President Trump signed executive orders over the weekend to extend unemployment benefits after Democrats and Republicans failed to agree a deal. Negotiations between the two parties are set to continue on Monday.

US – Sino tensions to cap gains

Concerns over rising US – Sino tensions are likely to weigh on sentiment, keeping gains in check. On Friday Trump signed executive orders banning TikTok and WeChat whilst also sanctioning Hong Kong’s Carrie Lam. China has since arrested Jimmy Lai a pro-democracy media mogul angering the US. Most importantly for the markets this week US – China negotiators will meet to assess progress in the Phase 1 trade deal. This is what the market is really interested in. So far, Trump is driving a hard line on China heading towards the US elections.

Oil Jumps 1%

Oil is pushing higher on Monday, extending last week’s gains, boosted by upbeat data from the US and China and by a bullish demand picture from Saudi Aramco, the largest oil producer in the world. State owned Aramco’s chief executive said that oil consumption in Asia, Aramco’s biggest market has almost returned to pre-covid levels. As economies across the rest of the globe continue to re-open he sees a similar pattern emerging. The rosy demand outlook, combined with Iraq saying iit will cut production by a further 40,000 barrels a day to compensate overproduction over the past three months are overshadowing the stimulus deadlock in Washington, at least for now.

FTSE Chart FTSE Chart

"Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.

Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions."

Original Post

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.