The Fed’s interest rate hikes and trade war risks have led to a bearish growth in emerging markets. What will happen next to the market? Many well-known investment institutions have commented on this. This article collects the latest opinion comments from various agencies for your reference.
Non-farm
Nomura Securities: The increase in non-agricultural employment in the US in March is expected to fall to 115,000. Nomura Securities said that this week we need to focus on the US March ISM manufacturing PMI and the US March non-farm employment report, which will be announced on Monday (April 2) and Friday (April 6). Specifically, the US non-agricultural employment in the March season is expected to increase by 115,000, the previous value increased by 313,000. The average monthly hourly wage in March is expected to increase by 0.2%, and the previous value will increase by 0.1%. US March ISM manufacturing PMI is expected to fall to 59.8, the previous value of 60.8.
Royal Bank of Canada: US non-farm payrolls data for March may be affected by weather factors. Excluding the impact of weather factors, the US unemployment rate is expected to fall to 4% in March, after the announced February unemployment rate was 4.1%.
Japan Dongzheng Stock Price Index
Goldman Sachs: Revise down the Japanese stock price index for the three-month forecast of 5.6% to 1700 points. In the latest customer report, the Goldman Sachs strategist team lowered the forecast of the Dongxu stock price index by 5.6% to 1700 points for three months, slightly lower than the current level. In addition, the bank also lowered the index's six-month and twelve-month expectations by 2.7% and 2.5%, respectively. The target is 1800 points and 1950 points. The 2017 stock price index closed at 1817.56 points.
In the first three months of 2018, overseas investors sold Japanese stocks worth 8.2 trillion yen, mainly in the form of futures, due to the uncertainty of Japan’s domestic political situation, the appreciation of the yen, the worries of global trade wars, and the macroeconomics of Japan. The performance of the data is uneven, and these factors will limit the upside of the Japanese stock market.
MSCI Alum Global Stock Index
MSCI's global stock index fell about 1.5% in the first quarter, off the record high. MSCI's global stock index rose 1.2% last week, but fell 1.5% in the first quarter, off record highs, as global trade tensions heat up, White House turmoil intensifies, and technology-led companies that lead the market are affected by regulatory and other concerns. .
Barclays strategists pointed out that we expect strong and widespread global growth to continue, but also warned that trade protectionism, uncertainty in US economic policy, concerns about rising cross-market volatility, and risk premiums in core interest rate markets These all indicate that the market needs to treat risky assets in a more strategic way.
US stocks
US stocks fluctuated wildly in April or not. The catalyst for US stock market volatility will shift from macroeconomic events such as trade policy and inflation concerns to specific corporate news.
The market will usher in the first quarter earnings season, the US company will announce the first three months of this year's earnings report, and provide guidance for the rest of 2018.
Goldman Sachs said investors are trying to find clear answers on a number of issues, including the impact of the recently passed tax reform bill, the prospects of trade protectionist policies, whether inflation has an upside signal, and the impact of interest rate hikes, so the company’s earnings report The announcement is crucial for investors. However, investors may not fully anticipate market volatility that may be triggered by these earnings forecasts.
Technology stocks that have experienced significant volatility in the near future may be particularly vulnerable to such volatility. According to Goldman Sachs, nearly 33% of earnings in April are forecasted by companies in the technology sector.
Justin Walters, co-founder of Bespoke Investments, said US stocks' fears will not ease until the earnings season. He said that based on recent market volatility, it is clear that shorts currently have the upper hand.
S&P 500 Index
Allianz: The S&P 500 has a big chance of hitting 3,000 points in the second half of this year, which is about 15% higher than the current point, as the company's earnings growth this year is expected to reach about 20%.
US LIBOR-OIS spread
Institution: The rise in the US LIBOR-OIS spread led to a rebound in the US dollar index.
Greg Gibbs, head of global foreign exchange capital at AmpGFX, said that the rise in US LIBOR-OIS spreads (interests between London Interbank Offered Rate and overnight index swaps) is the reason for the rebound in the US dollar index in recent days. This may be related to the US tax reform policy, including encouraging companies to reduce their overseas cash reserves.
Federal Reserve
Societe Generale: The Fed’s interest rate hikes and trade war risks have led to a bearish growth in emerging markets. Societe Generale 601166, shares said in the report, the results of visits to European and Hong Kong customers show that the bull market sentiment in emerging markets at the end of last year and the beginning of this year has significantly subsided.
Jason Daw, Head of Emerging Markets Strategy at Societe Generale in Singapore, said in the report that investors are generally optimistic about developing markets and interest rates, but the level of optimism is not as good as before; when it comes to prospects, he uses more words. These include “worrying about worryâ€, “selective bullishnessâ€, “reducing opportunities†and “bigger two-way riskâ€; about 20% of customers are currently in a bearish camp, and by the end of 2017, almost all customers All are bullish. According to Societe Generale, major market concerns include trade war risk and continued US interest rate hikes.
30-year US bond yield
Citigroup: Lower the expected level of 30-year US Treasury yields at the end of 2018 to 2.85%.
US stocks
Morgan Stanley: The US stock market has a buying opportunity to downgrade utility stocks.
Michael Wilson, chief US equity strategist at Morgan Stanley, believes that the market still looks attractive and may have buying opportunities before the strong performance release period; Wilson has rated the utility sector from the recent ones. The tactical outperform to the broader market was downgraded to a flat, but he did not see the downgrade rating as an appeal to sell the stock.
Wilson believes that the S&P 500's P/E ratio for the next 12 months seems to remain at the low end of the recent target trading range of 16.5-17.5 times. Many of the risks that have recently caused market volatility have been reasonably reflected in the stock price, and as the fundamentals of the performance period increase, there may be a moderate re-rating.
Royal Bank of Canada survey: Less than half of US stock market investors see more.
Lori Calvasina, head of US equity strategy at Royal Bank of Canada, wrote in a report on Monday that according to a survey at the end of March, about 45% of US stock investors are bullish or very bullish for the next 6-12 months, but only 20 % bearish or very bearish. 49% of investors “have become less constructive in the past three monthsâ€, with only 16% of respondents arguing that stock valuations are attractive, while 43% of respondents think they are expensive or very expensive Only 14% said that the valuation multiple will continue to expand.
For the next 6-12 months, 73% of respondents are optimistic about the US economy or very optimistic about it. About half (47%) expect the Fed rate target to reach 2.25% by the end of 2018, more than one-third (36%) is expected to reach 2.5%, 55% believe that the risk of Fed policy failure is high or high.
Chinese Depositary Receipt
Morgan Stanley: China's first batch of CDRs is expected to be launched at the end of the second quarter. Morgan Stanley said that according to the latest information released by the China Securities Regulatory Commission, the possibility of China's first batch of China Depositary Receipts (CDRs) was not ruled out at the end of the second quarter; the previous forecast was in the second half of the year.
Analyst Laura Wang and others said in the April 1 report that the new rules of the SFC have reduced the number of eligible companies from the previously reported 8 to five: Alibaba, Tencent, Baidu, Jingdong and Netease, the first batch 2 or 3 companies, each company's circulation is less than 5% of the issued shares.
US Treasury Bond Supply
Wrightson: The supply of US Treasury bills after April will depend on the US budget. Wrightson ICAP economist Lou Crandall said in the report that although the US Treasury is expected to cut Treasury bills in the coming weeks, the outlook for the issue after April is ambiguous given the very uncertain budget outlook of the US government.
Foreign exchange
USD/KRW
Bank of Singapore: As the tension eases, the outlook for the won is improving. Sim Moh Siong, currency strategist at Bank of Singapore, said the prospects for the won are "more bright" as geopolitical tensions ease.
As the leaders of China and North Korea met last week, and South Korean and North Korean officials confirmed part of the agreement reached after the date of the summit on April 27 for the leaders of the two countries, the geopolitical risk situation in North Korea has eased; the strategist said that Rump may postpone the revised trade agreement between the United States and South Korea until the North Korean issue is resolved, which will not be a "big problem" for the won.
The latest Korean export data shows that the growth rate has slowed down, but it has not changed the trend of healthy growth; the foreign exchange agreement with the United States has strengthened the signal that the Korean won exchange rate intervention may be reduced, which will create space for the Korean won to strengthen. The strategist expects that the short-term support of the US dollar against the Korean won is around 1050 won.
GBP to USD
Brown Brothers Harriman: The Bank of England's tightening policy is not conducive to economic growth, and the pound may fall to $1.20.
Brownish brother Harriman's foreign exchange strategist Masashi Murata said that the pound against the dollar may fall to 1.20 US dollars, because the Bank of England policy tightening, contain inflation, fear of economic growth. They believe that the Bank of England's policy outlook is not as clear as the Fed, but the Bank of England is expected to favor the hawks; affected by the Bank of England outlook, the pound may rise to 1.45-1.50 in the short term. However, in the long run, as the immigration declines and the Brexit comes, the factors that can drive economic development remain doubtful; as the economy deteriorates, the Bank of England will eventually have to relax its policy.
ING: During the year, GBP/USD is expected to rise to 1.45. ING continues to believe that there are multiple signs that the pound will rise to 1.45 against the dollar in 2018.
In March, the Brexit negotiations made significant progress. The performance of the UK economic data and the Bank of England’s monetary policy stance all turned into a good short-term pound. In the current global economic context, the Bank of England's rate hike in May is expected to be nailed. If the economic data regains some momentum and the performance is stronger than the low market expectations, then the Bank of England's expectation of raising interest rates twice will heat up. The pound went up further.
UOB Bank: Holds a neutral position on the pound and deposits a space of 1.4280. UOB has published a technical view of the pound against the dollar, and it seems that it has lost some of its kinetic energy to test up to 1.4280.
24-hour view: Last Friday (March 30) fell to 1.4011 days, and then rebounded. The short-term bottom is likely to have been built. It seems that there is room to rebound to 1.4070, but it is unlikely that it is currently clear. Breaking, the next resistance is at 1.4100. On the downside, the strong support is at 1.4000, but it is difficult to break.
One to three weeks of view: Although the retracement of the peak of 1.4244 last Tuesday (March 27) was more flexible and larger than expected, it continues to believe that the outlook is optimistic, and there is still room for measuring the main resistance at 1.4280, only A clear break below 1.4000 suggests that moderate action can be weakened, but a break below that level will not turn the current neutral position into a bearish position. That is to say, it will need to stand at 1.4100 in the next few days, otherwise the odds of going up to 1.4280 will be Further decrease.
Lloyd Bank: In the short term, the pound will fall back to 1.36 against the dollar. Since January this year, the British pound has risen 1.4% against the euro, ushered in the best quarterly performance since 2016. On the other hand, the pound against the US dollar has risen by about 3.9% this quarter, the most since mid-2015. Good quarter performance. Lloyds Bank analysts bet that the Bank of England's interest rate hike in May is even more hawkish, and believes that the Bank of England will further raise interest rates in November; however, the pound against the US dollar will fall back to 1.36 in the short term.
It is expected that the Bank of England will raise interest rates in May and November, while the Fed will tighten monetary policy twice again during the year; the progress of the Brexit negotiations and the policy of US President Trump are the potential risks of the exchange rate fluctuation of the British pound against the US dollar. . It is expected that in the short term, the exchange rate of the British pound against the US dollar may fall back to 1.36, and then gradually rise back to 1.42.
Euro against the dollar
UOB Bank: The euro is still stuck in a wide range of 1.2235-1.2475. UOB issued a technical opinion on the euro against the US dollar, and it is expected that the turnover will continue to fluctuate this week.
24-hour view: Monday (April 2) continued the volatility of last Friday (March 30), the technical indicators remained basically unchanged, suggesting that it is expected to continue trading in the 1.2295-1.2340 range. The next one to three weeks view: The recent shock market makes the outlook unclear, and the technical indicators remain basically unchanged. There is no initial indication that the exchange rate will enter a long-term trend.
In other words, the one-month neutral position is still intact, and it is expected to continue to trade in the 1.2235-1.2475 wide range. The strong support is at 1.2235. After the break, the target will look at the March low of 1.2153.
The yen has replaced the euro as the most attractive developed market currency.
Van Luu, head of currency and fixed income strategy at Russell Investments, believes that the yen has replaced the euro as the most attractive developed market currency; we believe the yen can continue to sing all the way; the speculative yen position is still very short, which may The market is vulnerable to the positive news of the yen, whether the Bank of Japan reduces the easing, or the event that prompted investors to hedge.
For the US dollar, the escalation of tensions may undermine the willingness of US trading partners to hold US dollar assets, and their potential for sustained recovery is small. After 12 months of soaring, the euro may have a short-term correction; in the medium term, the possibility of the euro rising to 1.30 against the dollar is higher than the possibility of falling to 1.15, as the European Central Bank began to gradually withdraw from the quantitative easing policy.
USD/JPY
UOB Bank: USD/JPY may re-touch 107.90 in the next few weeks.
gold
Bank of America Merrill Lynch: The price of gold is expected to reach $1,450.
In the first quarter, spot gold climbed for the third consecutive quarter, the longest consecutive cycle since 2011; Bank of America Merrill Lynch foreign exchange and commodities technology strategist Paul Ciana said that gold prices may rise strongly at the beginning of the second quarter. He said that gold may be constructing a bullish flag shape, which is another sign that gold prices may rise. The current price of gold is around $1,320 per ounce. If the bullish flag is formed, the price of gold may rise to $1,450 per ounce. about.
coal
World Bank: It is predicted that the use of coal will fall sharply in the next 30 years.
copper
Shanghai Nonferrous Metals: As copper prices fall, China's imported refined copper premium remains stable. According to Shanghai Nonferrous Metals, the premium of China's imported refined copper relative to LME copper price remained unchanged for the third consecutive week; since March 9, the Yangshan copper premium has remained at 80 US dollars per ton, the highest since December 26 Level.
Guotai Junan Futures analyst Ji Xianfei said that with the price falling and the price of the Shanghai Futures Exchange being weaker than LME, domestic users are hesitant in establishing inventory; Ji Xianfei said that at present, the import of copper from the market based on LME price will have a loss, premium upside Therefore limited.
Note: The copper price in the Shanghai market has fallen by 9.4% this year, the worst among the six basic metals.
Blockchain and cryptocurrency
TD Bank plans to track digital assets through blockchains. TD Bank is considering digitally tracking its assets by establishing a common blockchain and has applied for patents. Through this blockchain technology, large banks can connect and track transactions.
The Chilean state-owned bank will sever contact with cryptocurrency exchanges.
El Mercurio reported that on Thursday, Chilean state-owned banks notified Orionx, CryptoMKT and Buda.com that their accounts would be closed within 10 days. Prior to this, Scotiabank and Brazil's Itaú also said they would close the accounts of the three cryptocurrency exchanges.
Emerging Markets
Goldman Sachs: Emerging market risk appetite is expected to recover in April. Goldman Sachs analysts including Danny Suwanapruti and Jonathan Sequeira said that risk appetite in emerging markets is expected to rebound in April, as trade war fears may peak, fundamental growth remains strong, and US Treasury yields stabilize.
The global risk appetite improved to support the Indonesian rupiah assets, and the Philippine peso short-term outlook was reversed from neutral, because the Indonesian central bank played down the inflation risk.
Global iron ore market
Anglo-American company's Brazilian mine shutdown has disrupted the global iron ore market. Iron ore investors are currently assessing the impact of long-term suspension of Anglo American's Brazilian iron ore mines on the global market after a pipeline leak, including whether high-grade iron ore prices will be boosted, thereby helping to sustain The premium of high grade ore relative to the base ore.
Di Wang, an analyst at CRU Group in Beijing, said the accident, which was announced near the weekend, could affect the supply of high-grade mineral powder. On Monday, the benchmark iron ore futures prices in Dalian and Singapore both rose, although the initial gains were subsequently smoothed out.
Iron ore prices fell sharply last month and fell into a bear market, and the news that the Anglo-American Minas Rio project was shut down for at least a month was a surprise, forcing investors to reassess the iron ore price outlook. Wang said that this may affect the supply of high-grade mineral powder. The difference between grade 62% and 65% mineral powder may be supported. Of course, it depends on the demand.
(Editor: Wang Zhiqiang HF013)
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