Financial Markets Today

Crude oil prices appreciated today, rising ca 1% during trade as a Reuters Survey of crude oil output for February, indicated a 2nd consecutive month of decline in output from the Organisation of Petroleum Exporting Countries (OPEC). Crude oil output dropped to a 4-year low, dropping ca 300,000 barrels per day in February. This comes as trade negotiations between the world’s largest economies, U.S. and China appear close to deal that could reverse tariffs on ca $250 billion of imports from either countries. Yields on government treasuries in develop economies declined today, on increased investors’ interest after the Chinese government lowered its 2019 GDP growth rate forecast to 6% – 6.5%, lower than the 6.6% achieved in 2018, its slowest pace since 1990. The drop in the economic growth outlook for the world’s 2nd largest economy can be attributed to continued uncertainties of the U.S./China trade negotiations, with tariffs on ca $200 billion of Chinese exports to the U.S. still in place for most of Q1, with increasing negative impact on the Chinese economy.

We expect the continued negative impact of current U.S/China trade uncertainties on the Chinese economy will further spur new domestic stimulus by the Chinese government to improve domestic demand and economic activities in the world’s 2nd largest economy. We also expect this to further increase investors’ uncertainties of global growth in 2019.

Financial Markets Update – 05 March 2019

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