Market Updates: Global Equity Markets Continue To Be Impacted By Macroeconomic Factors

Global Tensions Persists, Trade Wars Still A Concern

The fears of the trade wars between the US and China are still looming over the global financial markets. The global economists view this as a big hurdle in the growth prospects of the economies primarily because of the falling business and consumer confidence. The report which was recently issued by the International Monetary Fund or IMF states the assessment about the prevailing financial conditions. It also reflects the risks which the system is primarily exposed to. According to IMF, it is the trade battle which doesn’t get resolve and it escalates further, thereby, it would negatively impact the sentiments of the market participants which prompt them to liquidate their holdings and leading to a significant sell-off.

Because of the heightened tensions pertaining to the global trade wars, the IMF has decreased the forecasts related to the global growth by 0.2 percentage points which makes it 3.7%. Moreover, the impacts are also being felt on the emerging markets like Argentina as well as Turkey. Even India has been witnessing the significant impacts from the rupee depreciation, increased oil prices as well as capital outflows.

What Could Impact Australian Markets?

Needless to say, the trade tensions could have the adverse impact globally. Thus, the risk of deteriorating economic growth might also impact the Australian economy. The expectations of higher interest rates could further appreciate the dollar which could impact the currencies of the emerging economies. The number of factors is expected to impact the Australian markets; however, the main concern of the market participants is that how much can each factor impact.

The primary factors which could affect Australian markets’ performance include the global growth which would be affected by the Chinese economy which is not in a good shape. Also, trade battle impact on the financial markets is the next concern. However, the apex bank in China has now intervened. The central bank has lowered the mandate of the reserve capital which the banks need to maintain thus, improving the lending activities.

Higher lending activities by the consumers as well as businesses would, in turn, lead to an increase in economic activity. The significant factor which is weighing on the Australian markets is the selling activities in the equities which have undertaken globally because of the elevated interest rates. On October 10, 2018, S&P/ASX200 ended the day at $6049.8 which implies the marginal rise of 8.7 points or 0.1%. The major stocks which witnessed strong momentum in the session were Navitas Limited (ASX: NVT) and Domino’s Pizza Enterprises Limited (ASX: DMP) as they advanced 21.839% and 5.016%, respectively. The stocks which declined were Orocobre Limited (ASX: ORE) and Lynas Corporation (ASX: LYC) falling 5.542% and 4.274%, respectively.

Overall, 2018 has been a tough ride for global investors. While the global markets are dealing with pressures from the higher interest rates, the Australian markets have facing their own problems like misconduct on the part of banks as well as a decline in the house prices. A survey was conducted by the property professionals and the outcome not much impressive. It was stated that the Australian housing market is in the process of losing the confidence and the decline in the prices is expected to continue further.

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