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Daily Market Outlook by Solid Trust Markets
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[QUOTE="SolidTrustMarket, post: 101424, member: 36800"] [b]Daily Market Outlook 3 May[/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 erased earlier gains and the Japanese yen rallied to a fresh eighteen-month high on Tuesday as investors grew doubtful about global central banks' ability to boost growth through aggressive policy easing. Financial spread betters expect stock markets in Britain, Germany and France to open broadly steady to slightly higher on Tuesday. BOJ stunned markets last week by keeping monetary policy unchanged in the face of growing headwinds for its economy while the ECB has recently struck a more guarded stance on the question of adding more stimulus. Australia's central bank on Tuesday joined a growing line of central banks in adding more stimuli, cutting its cash rate to a record low of 1.75% to head off deflationary risks. The majority of economists surveyed by Reuters had expected no change at the meeting. While a firm finish in U.S. stocks, thanks to a rebound in financials led by Berkshire Hathaway, offered some hope to Asian investors, the sharp gains in the Japanese yen against the dollar deflated optimism. The dollar set a fresh 18-month low versus the yen on Tuesday, as the yen pushed higher in a holiday-thinned market with one Singapore-based trader saying there appeared to some speculative yen buying. Japan is in the middle of its Golden Week series of holidays. Markets were closed on Friday and will be closed on Tuesday to Thursday this week. After raising interest rates in December for the first time in nearly a decade, the Federal Reserve held monetary policy steady last week. While it kept the door open to a hike in June, it gave no signal that it was in a hurry to tighten further given the economy's slowdown, even as the labor market has improved. U.S. factory activity expanded at a more moderate pace in April due in part to a slowdown in new orders, but a rise in export orders to a near 1-1/2-year high and signs an inventory overhang drag was fading offered hope for the manufacturing sector. Another report on Monday showed construction spending rose to an 8-1/2-year high in March and the prior month's outlays were revised higher, implying a small upward revision to the first quarter's pedestrian growth rate. The Institute for Supply Management (ISM) said its index of national factory activity slipped to 50.8 last month from a reading of 51.8 in March. Despite the fall, April marked the second straight month of expansion and was also the second highest reading in the last eight months. Manufacturing has been hurt by weak export growth stemming from a strong dollar and soft global demand. Manufacturing last month was held back by a drop in the gauge of orders received by factories, which fell 2.5 points to 55.8 percent. Factory production also fell last month. Economic growth slowed to a 0.5 percent annualized rate in the first quarter. Given a fairly robust labor market, which is expected to boost sluggish consumer spending, economists expect gross domestic product growth to rebound in the second quarter. The economy grew at a 1.4 percent rate in the fourth quarter. In a separate report, the Commerce Department said construction spending increased 0.3 percent in March to its highest level since October 2007, following an upwardly revised 1.0 percent jump in February. Construction outlays were previously reported to have declined 0.5 percent in February. Economists expect GDP growth for the first three months of the year will be revised up to a 0.7 percent rate. Construction spending in March was supported by a 1.1 percent surge in private construction, which hit its highest level since October 2007. Public construction spending fell 1.9 percent in March. Oil prices rose on Tuesday as the dollar slipped to an 18-month low against the yen, potentially spurring fuel demand, but gains were restricted by rising Middle East output that renewed concerns of a global supply overhang. Higher oil came on the back of a slumping dollar, which makes purchases of dollar-traded fuel cheaper for countries using other currencies, potentially spurring demand, as well as strong investor interest in oil. Energy Aspects' oil analyst Virendra Chauhan said the weak U.S. dollar was a factor in rising oil prices, but also pointed to a "sentiment shift", with significant passive and commodity trading advisor (CTA) money flows back into energy after two years out. However, traders said the gains were capped by rising output in the Middle East as well as fears over China's economic health after factory activity shrank for a 14th straight month in April. Iraq, the second biggest exporter within the Organization of the Petroleum Exporting Countries (OPEC), was the latest OPEC-member to announce its exports were rising, reporting oil shipments from southern fields at an average rate of 3.364 million barrels per day (bpd) in April. That was higher than the March average of 3.286 million and close to its November record of 3.37 million bpd. Production in OPEC's biggest exporter, Saudi Arabia, was 10.15 million bpd in April, but sources have said it may rise to near-records of 10.5 million bpd in coming weeks. Iran is also adding to surging Middle East output following an end to crippling sanctions in January. The producer has increased its exports to almost 2 million bpd from a little over 1 million bpd at the start of the year, with sales to South Korea in particular soaring. The Middle East supply jump counters falling output in the United States, where production has declined from a peak of around 9.6 million bpd in June 2015, to below 9 million bpd now, according to U.S. EIA data. This helped lift crude futures by almost a third in April, and they have recovered over 70 percent from decade lows reached in early 2016. [/QUOTE]
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