Since the start of the year, the markets have been gloomy with a potential global recession looming. China’s economic slowdown and the low prices of oil were the major contributors of the bearish sentiment in the market. Nonetheless, with the recent stabilizing of the oil prices and better-than-expected reports posted by the US, the markets have developed a buoyant mood. The good reports have made the US dollar to strengthen consistently against other major currencies favoring the shares markets.
In Europe, the shares market was underpinned by solid gain results from WPP, the world’s largest advertiser. Also, investors in Europe have developed a bullish sentiment with an expected stimulus from the European Central Bank before mid-March. The excellent reports from the US have made the Yen lose some ground making it favorable for global exporters. With the oil prices showing signs of stability with a second six percent weekly jump in a row, there is a buoyant mood in the market ahead of the non-farm payroll report announcements.
The positive US data and rising oil prices have enabled investors to regain confidence in the markets putting worries of a potential global recession behind them. It is expected that the report will show that 190,000 jobs were added in the last month in the US with the unemployment level maintained at an eight-year low of 4.9%.
The better-than-expected data earlier in the week from the US has made the dollar to gain marginally against other major currencies. If the non-farm payrolls data is positive, the dollar is set to strengthen further as it will indicate a healthy US economy prompting the Federal Reserve to hike interest rates by the of 2016. Consequently, the Yen has weakened favoring investors in Asia. The developments have made Asian shares set for best week in 5 months, awaiting US jobs data.
The Sterling Pound has also gained two percent during the week shedding off some losses from February’s five percent ‘Brexit’ battering. The investors around the world are abandoning the bond markets ahead of the payrolls data with uncertainties looming.
Asian Shares Rising
The recovery of oil prices has developed a risk appetite reducing the vulnerability of metals to a downward trend. The rising oil prices have boosted consumer spending reducing deficits in the oil producing and exporting nations’ budgets. The emerging markets stocks have improved significantly with India and China shares gaining significantly.
The week has been favorable for Japan’s Nikkei that gained five percent while the primary Chinese share markets appreciated by at least 3.5 percent. With the annual meeting of China’s parliament sent to start on March 5, investors are hopeful that the People’s Bank of China will come up with a policy stimulus package to solve the major slowdown worries. The parliamentary meeting will also map out economic goals for the next five years in China making it an important event on the global economic calendar.
The positive data from the US has enabled the dollar to gain marginally against other currencies ahead of the non-farm payrolls data report. Through this gain, the Asian currencies have weakened which has favored the shares markets. If the non-farm payrolls data comes out better-than-expected, the currencies will slump further against the dollar hence supporting the Asian stocks.