FTSE Rallies On Global Economic Recovery Optimism
Fiona Cincotta August 10, 2020 5:19 PM
The FTSE, along with its European peers are pointing to a stronger start, boosted by upbeat data from the US and China.
The FTSE, along with its European peers are pointing to a stronger start, boosted by upbeat data from the US and China. However, gains could remain capped in a quiet day for corporate releases and as the focus remains on US lawmaker’s ability to agree additional stimulus.
China’s consumer inflation accelerated for a second straight month in July. The CPI inflation gauge grew 2.7% yoy in July, up from 2.5% in June. On a monthly basis, prices increase 0.6%. Official data also showed that PPI which measures inflation at factory level rose 0.4% month on month.
The data adds to mounting evidence that the economic recovery in China is not only solid, but also gaining momentum, boosting optimism that the world’s second largest economy will offer serious support to the global economic recovery.
US – Sino tensions to cap gains
Concerns over rising US – Sino tensions are likely to weigh on sentiment, keeping gains in check. On Friday Trump signed executive orders banning TikTok and WeChat whilst also sanctioning Hong Kong’s C arrie Lam. China has since arrested Jimmy Lai a pro-democracy media mogul angering the US. Most importantly for the markets this week US – China negotiators will meet to assess progress in the Phase 1 trade deal. This is what the market is really interested in. So far, Trump is driving a hard line on China heading towards the US elections.
Oil jumps 1%
Oil is pushing higher on Monday, extending last week’s gains, boosted by upbeat data from the US and China and by a bullish demand picture from Saudi Aramco, the largest oil producer in the world. State owned Aramco’s chief executive said that oil consumption in Asia, Aramco’s biggest market has almost returned to pre-covid levels. As economies across the rest of the globe continue to re-open he sees a similar pattern emerging. The rosy demand outlook, combined with Iraq saying it will cut production by a further 40,000 barrels a day to compensate overproduction over the past three months are overshadowing the stimulus deadlock in Washington, at least for now.
From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.