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Daily Market Outlook by Solid Trust Markets
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[QUOTE="SolidTrustMarket, post: 102284, member: 36800"] [b]Daily Market Outlook 16 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] Buoyant Japanese stocks led Asian stocks to modest gains on Monday, helping to offset some of the gloom from soft Chinese data, while the dollar firmed against the euro and yen after receiving a boost from upbeat U.S. indicators. Hopes for more government fiscal stimulus also favored Japanese shares. It held the gains despite a denial by Japan's top government spokesman on Monday that Prime Minister Shinzo Abe has decided to delay the tax hike. Commodities were hurt as the dollar reached a two-week high against a basket of currencies on Friday's upbeat April U.S. retail sales data, which jumped 1.3 percent for the largest gain since March 2015. A stronger greenback tends to weigh on non-U.S. buyers of dollar-denominated commodities. Bank of Japan Governor Haruhiko Kuroda likes to keep markets guessing by saying one thing and doing another, but, when it comes to ruling out "helicopter money" to reanimate the economy, officials and close associates say he almost certainly means it. Despite monetary easing on an unprecedented scale over the past three years, data on Wednesday is likely to show Japan's economy barely grew in the first quarter. Fears policy makers are out of ammunition has led a growing number of overseas investors to speculate the BOJ might resort to helicopter money - an untested policy in which a central bank permanently expands the money supply that Nobel laureate Milton Friedman likened in 1969 to dropping cash from a chopper. The BOJ is already helping finance Japan's huge public debt cheaply by gobbling up government bonds at an annual pace of 80 trillion yen ($737 billion), more than double the amount newly issued each year, but it is buying them in markets. The dollar rose to one-month highs against a basket of its major peers on Friday after stronger-than-expected reports on U.S. retail sales and consumer sentiment soothed investor concerns over the strength of the economy. The Commerce Department reported Friday that retail sales jumped 1.3% in April, topping economists’ expectations for a 0.8% increase. It was the largest monthly increase since March 2015. The dollar received an additional boost after data showing that U.S. consumer sentiment improved this month. The preliminary reading of the University of Michigan’s index of consumer sentiment came in at 95.8 in May, up from 89.0 in April and well ahead of expectations for a reading of 90.0. It was the highest reading since June 2015. The upbeat data helped ease some fears over the outlook for the U.S. economy and rekindled expectations that the Federal Reserve could raise interest rates sooner than anticipated. In the euro zone, data on Friday showed that first quarter growth was revised down slightly to 0.5% from an initial estimate of 0.6%. Annual growth also slowed slightly to 1.5%, from a previously reported 1.6%. Sterling remained under pressure after the International Monetary Fund warned Friday that a U.K. exit from the European Union could trigger a stock market crash and steep falls in house prices. In the week ahead, investors will be looking ahead to Tuesday’s data on U.S. inflation and Wednesday’s minutes of the Fed’s April meeting for clues on the path of future interest rate increases. Preliminary data from Japan on first quarter growth and jobs reports from the U.K. and Australia will also be in focus. Oil prices jumped over 1 percent on Monday after long-time bear Goldman Sachs said the market had ended almost two years of oversupply following global oil disruptions and flipped to a deficit. Supply disruptions from Nigeria, Venezuela, the United States and China triggered a U-turn in the oil outlook of Goldman Sachs, which long warned of overflowing storage and another looming crash in prices. "The oil market has gone from nearing storage saturation to being in deficit much earlier than we expected," Goldman said, adding that the market "likely shifted into deficit in May driven by both sustained strong demand as well as sharply declining production." In Nigeria, oil major Exxon Mobil suspended exports from the country's biggest crude stream, Qua Iboe, and other producers have also suffered disruptions following acts of sabotage, cutting the country's output to its lowest in decades at around 1.65 mn bpd. In the Americas, major oil exporter Venezuela seemed on the brink of meltdown, triggering fears of default by its national oil company PDVSA, which has to make almost $5 bn in bond payments this year. Venezuela's oil production has already fallen by at least 188K bpd since the start of the year as PDVSA struggles to make the investment needed to keep output steady. In the United States, crude production C-OUT-T-EIA has fallen to 8.8 mn bpd, 8.4% below 2015 peaks as the sector suffers a wave of bankruptcies. And in China, output fell 5.6 percent to 4.04 million bpd in April, compared with the same time last year. Countering these disruptions, supply rose from the OPEC following the lifting of sanctions against Iran which triggered a race for market share between Tehran and OPEC-rivals like Saudi Arabia, Iraq, the United Arab Emirates and Kuwait. OPEC pumped 32.44 mn bpd in April, up 188K bpd from March. This is the highest since at least 2008, according to a Reuters review. [/QUOTE]
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