Market Wrap-up for the Week.

Market Wrap-up for the Week.

Market Wrap Up
Market Wrap Up.


Viewing the Big Picture:

 

Great 10 key questions reviewed by Danske Bank about the Global economy in 2020.

 

  1. The global economic cycle: boom, bust or just a modest muddling through?
  2. New targets but the same old problems: where will the ECB and FED reviews end up?
  3. Will fiscal policy be the new game in town?
  4. The end of Trumpism? Who will win the US election, and will it matter to markets?
  5. Will China and the US find a permanent trade solution –or will they move further apart?
  6. No-deal Brexit risk revisited: can the UK and the EU strike a deal before end-2020?
  7.  Broad USD strength –will it continue?
  8. Will 2020 finally be the year where yields end markedly higher?
  9. How much more upside is there for global stocks?
  10. Will the Middle East tensions cause a surge in oil prices?

 

The global economy is currently experiencing a great relieve from the US and China Phase-1 and may get better going through the phase 2 deal and the monetary policy of the Fed and ECB will likely determine the shift in the market going through the end of 2020. Reports have it that markets stay lukewarm as the global economy recovers.

 

The United states house is currently divided and it maybe difficulty to determine who will win in the coming election. The trade war phase-2 deal is set to kick-off this year 2020 though, it is not completely sure we will have a complete agreement of the deal, but we expect a partial agreement. The Brexit announcement is set for hearing by January 31st this year but, the fear of no deal Brexit is looming and might be, as the UK may not get all deal through.

 

The U.S. Dollar is set to stay strong in 2020 because the growth in the U.S. compared to the rest of the G10 remains relatively high, inflation remains relatively high, the U.S. base interest rates, which are set by the Fed, still remain well above those of any other G10 economy, the expectation of the Dollar to continue trading robustly, and the expectation of a strong Dollar is politics.

 

In 2020, we expect rates to remain in a relatively tight range through the year while acknowledging a mild upside risk.

 

The equity risk premium (ERP) is likely to stay flat in 2020 and hence equity returns should be in low single digits. Implied volatility in the oil market remain slow compared to the spike around the September attack on Saudi Arabia and previous OPEC meetings.

 

Iran’s output is already severely depressed by sanctions. Sanctions on Iraq are easier said than done (most of its exports go to China and India. Saudi Arabia, Kuwait and UAE can swiftly raise output by more than 1.5mb/d and 4) US (and other major oil importers) have large strategic reserves they can utilize to mitigate a sudden output loss.

 

-Moses Kayode, Derivative Analyst.

-Winsala Gbotemi, Financial Staff Writer.

 

 

Eagle Global Markets.

1 Comment to “Market Wrap-up for the Week.”

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