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Daily Market Outlook by Solid Trust Markets
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[QUOTE="SolidTrustMarket, post: 106797, member: 36800"] [b]Daily Market Outlook 1 August[/b] [img]https://scontent-mrs1-1.xx.fbcdn.net/v/t1.0-9/12717510_174118869626335_4845820293159483711_n.jpg?oh=cfe2e64c784640ad95eb7cdbcd6ed352&oe=58089787[/img] Asian shares hit a one-year high on Monday after disappointing U.S. economic growth data reduced expectations that the U.S. Federal Reserve will raise interest rates in the next few months. U.S. gross domestic product increased at a 1.2 percent annual rate in the April-June period, less than a half of a 2.6 percent growth rate economists had expected. Asian markets showed limited reaction to a better-than-expected private survey on China's factory sector. The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) rose to a 1 1/2-year high of 50.6, beating market expectations of 48.7 and up from 48.6 in June. Analysts reckoned the weak U.S. economic growth in the second quarter left the Fed was nowhere close to tightening policy, even after it had appeared last week to have opened the door to raising interest rates later this year by saying near-term risks to the economy had diminished. Fed funds rate futures are pricing in only around 30 percent chance of a rate hike by December, compared to about 50 percent early last week. Investors will be watching how European financial markets will react to the results of the European Union bank stress test, which showed some banks are still vulnerable. Moments before that announcement, Italy's Monte dei Paschi bank, which fared the worst in the stress test, unveiled a privately funded rescue plan consisting of 9.2 billion euro sales of bad debt and 5 billion euro recapitalization. The poor health of the world's oldest bank has been seen as a grave weakness in the euro zone economy, posing a threat to the wider Italian banking system and also to the increasingly shaky political standing of Italian Prime Minister Matteo Renzi. The Federal Reserve should be cautious in considering an interest rate increase due to lingering risks to the U.S. economy, one of the central bank's most influential policymakers said on Monday, appearing to signal the chance of a hike by the end of the year was fading. While New York Fed President William Dudley said it was "premature" to rule out a policy tightening in 2016, he added that negative shocks were more likely than positive ones due to the unknown fallout from Britain's vote to leave the European Union, a strong dollar, and because it was safer to delay a move with rates so low. "All three of these reasons - evidence that U.S. monetary policy is currently only moderately accommodative, the fact that U.S. financial conditions have been influenced by economic and financial market developments abroad, and risk management considerations - argue, at the moment, for caution in raising U.S. short-term interest rates," said Dudley, a close ally of Fed Chair Janet Yellen and a permanent voter on U.S. policy. Dudley called the recent U.S. GDP reading of 1.2 percent annualized growth for the second quarter as "sluggish" but stuck to his expectation that the economy would rebound to about 2 percent growth over the next 18 months, and said he was confident inflation would rise to the Fed's 2 percent goal in the medium term. Japanese manufacturing activity shrank in July at a slower pace than the previous month but new export orders contracted the fastest in more than 3-1/2 years, a private survey showed on Monday, in an indication that recent yen gains are hurting exporters. The IHS Markit/Nikkei Japan Final Manufacturing PMI rose to 49.3 in July, versus a preliminary 49.0 and a final reading of 48.1 in June. But the headline index remained below the 50 threshold that separates contraction from expansion for the fifth month. The sub-index for new export orders was 44.5. That compares with a preliminary reading of 44.0, but showed overseas demand fell at the fastest pace since December 2012. Oil prices started August trading with fresh falls on Monday after several bearish reports, including rising output from OPEC, a rise in U.S. drilling and weak economic data from Asia. Oil output from the OPEC is likely in July to have reached its highest in recent history, at 33.41 million bpd in July from a revised 33.31 million bpd in June, a Reuters survey found on Friday. In OPEC-member Libya, the state oil company said on Sunday it welcomed the reopening of blockaded oil ports following a deal between the U.N.-backed government and an armed force, saying it would begin work to restart disrupted exports soon. In the United States, drillers last week added oil rigs for a fifth consecutive week as part of the biggest monthly rig count increase in over two years, Baker Hughes Inc said on Friday, adding three oil rigs to a total of 374, compared with 664 a year ago. Just as oil supplies were rise, new economic concerns arose. China's manufacturing activity unexpectedly shrank in July, with the official PMI standing at 49.9 compared with 50 in June, putting it just below the 50-point mark that separates growth from contraction. In South Korea, July exports fell at the fastest pace in three months, data showed on Monday, far worse than expectations. Exports fell 10.2 percent on-year to $41.05 billion in July, their biggest fall since April this year. [/QUOTE]
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