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Daily Market Outlook by Solid Trust Markets
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[QUOTE="SolidTrustMarket, post: 100293, member: 36800"] [b]Daily Market Outlook 14 April[/b] [img]https://scontent-lhr3-1.xx.fbcdn.net/hphotos-xtl1/v/t1.0-9/12717510_174118869626335_4845820293159483711_n.jpg?oh=2a23c6b13a613b005f9fef79fea074e7&oe=576A6387[/img] Asian stocks rose to their highest levels in more than four months on Thursday and regional currencies weakened led by the Singapore dollar as hopes grew that more central banks will join the city state in easing monetary policy in the comiing months. Singapore's central bank on Thursday surprised markets by setting the rate of appreciation of the Singapore dollar policy band at zero percent after data previously showed economic growth stalled in the first quarter. Notwithstanding the optimistic trade data out of China on Wednesday, Singapore's policy decision is yet another reminder of the headwinds facing the global economy. Earlier this week, the IMF cut its global growth forecast for the fourth time in the past year, citing a bunch of factors including chronic weakness in advanced economies. Stock markets across the region were a sea of green led by Japan and Hong Kong as investors interpreted this as sign of more policy easing by the trade-dependent economies of South East Asia and a shallower trajectory of interest rate increases by the U.S. Federal Reserve in the coming months. That came after bank shares in Europe .SX7P did even better, surging 6.3 percent, as investors scooped up Italian banks, re-evaluating a state-orchestrated plan to set up a 5 billion euro ($5.7 billion) fund to shore up weaker banks. The dollar was broadly firmer on Thursday, having posted its biggest one-day gain in more than a month as an improvement in global sentiment led investors to trim bearish dollar positions. The yen got no help from Bank of Japan Governor Haruhiko Kuroda, who said overnight in a speech in New York that the central bank was ready to expand monetary stimulus again if recent weaknesses in inflation expectations persist, stressing that there are "many ways" to do so to achieve his ambitious price target. Kuroda made the remarks ahead of a meeting of Group of 20 financial leaders in Washington this week, where currency policy is seen high on the agenda in the face of subdued global growth. The Federal Reserve has highlighted global uncertainty as the major bar to another hike in interest rates. So, when upbeat trade data out of China and a pick-up in commodity prices seemed to lessen the risk of a deeper world downturn, dollar bulls figured there was now more chance of a move. Just this week, Richmond Fed President Jeffrey Lacker, San Francisco Fed President John Williams and Philadelphia Fed President Patrick Harker all suggested that several hikes were possible this year. Fed funds are barely pricing in one hike this year, let alone multiple tightenings after recent dovish comments from core Fed members led by Chair Janet Yellen. In an interview with Time magazine published on Wednesday, Yellen again highlighted a cautious approach to monetary policy, saying the U.S. central bank must try to avoid making "big mistakes". An unexpected fall in U.S. retail sales in March supported Yellen's cautious approach. The disappointing data contributed to a fall in U.S. yields, yet it failed to dent the rallying dollar. Oil prices fell on Thursday as OPEC warned of slowing demand and Russia hinted that there would only be a loose agreement with little commitments at the upcoming exporter meeting to rein in ballooning oversupply. Meanwhile, Goldman Sachs said that productivity gains by U.S. shale producers were keeping alive its "deflationary outlook" for oil prices as drillers manage to adjust to lower prices instead of going out of business. Russian oil minister Alexander Novak told a briefing that a deal on an output freeze scheduled this weekend will be loosely-framed with few detailed commitments. This would make it unlikely that the meeting by top exporters in Qatar on Sunday will successfully rein in production of around 2 million barrels per day (bpd) of crude in excess of demand. Morgan Stanley said in a note that "we think any agreement actually sets up bearish catalysts for the months ahead." With the likelihood of a binding freeze by the Organization of the Petroleum Exporting Countries (OPEC) and Russia fading, analysts will look to the U.S. oil industry to see if lower drilling will result in falling production. Here too, the outlook is for production to remain higher than many expected. "Shale productivity gains remain a key driver of our long-term deflationary outlook for oil prices," said Goldman Sachs. With no end in sight to the supply glut, much will depend on demand to determine the size of the market's oversupply. OPEC on Wednesday cut its 2016 forecast for global demand growth and warned of further reductions. World demand will grow by 1.20 million bpd in 2016, OPEC said in its monthly report, 50,000 bpd less than expected previously. Morgan Stanley pointed to several bearish risks for oil, including "significant selling pressure from producer hedging if prices rise... (and) reemerging macro headwinds." The bank said it was "bearish oil prices into 2H16" and that "sustaining a price above $45 WTI in the front will be difficult... into 2017." [/QUOTE]
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