The global investors are worried about the global economic slowdown and this could severely impact the financial markets and the sentiments of the investors. The primary reason which has been weighing over the investors’ sentiments is the trade tensions between the US and China. The geopolitical worries have the potential to severely impact global economies and these worries could also derail the growth prospects of the global economies.
However, worries about the economic downturn were further raised after the slowdown was witnessed in the Chinese economy. The market players have been expecting that the US Federal Reserve would now patient with regards to the interest rates increases. The fears of the global economic slowdown could dampen the investors’ sentiments and they might decide to stay away from the equity investments (largely because of the risk associated with equity investments). Considering the present scenario, it can be assumed that the investors in the US markets would be more inclined towards the US earnings season. The broader equity markets are also sensitive to the corporate earnings.
The investors in the Australian markets also have some events which they would be waiting for. These investors would be waiting for the final report of the Royal Commission which would include the important information for the bank financial entities. It’s crucial to understand the effect of the changes on the applicants. The investors would be closely tracking the final report of Royal Commission.
Moreover, the investors would also be tracking the meeting of the Reserve Bank of Australia (or RBA). The Monetary Policy meeting’s minutes reflected that there was a rise in the growth of business credit with regards to Australia in H2 2018. The minutes stated that even though the rise in business lending was largely aided by the foreign banks, even giant banks in Australia have contributed to the rise in the business credit. The minutes added that considering the present financial as well as economic conditions, present monetary policy stance will be helping the economic growth. The bank had maintained a cash rate at 1.5%. It is also important to note for the market participants that the unfavourable momentum in the Chinese economy has the potential to severely impact the broader Australian economy. The minutes also depicted that the central bank of Australia is of the view that not changing the monetary policy stance will provide support to the economy’s growth.
However, some of the market players expect that the Australian central bank would not be changing its stance with regards to the interest rates moving forward. Mr. Bill Evans, Westpac’s Chief Economist, stated to the media panels that the decision with regards to the interest rates would be sensitive to the Australian economy. However, the weaker Chinese economy might also affect the broader Australian economy and, in turn, the interest rate decision. Therefore, it can be assumed that the meeting of the Reserve Bank of Australia would of utmost importance and the market players would be closely tracking the same.
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