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Why the stock market rally will not last long, despite dovish moves by central banks

Few would have predicted at the end of last year, when stock markets were in free fall, that global equities would bounce back so spectacularly.In the first half of 2019, the MSCI All-Country World Index, a leading gauge of shares in developed and developing economies, surged almost 15 per cent, its best first half of the year since 1997. The fierce rally has left the index just 4.5 per cent shy of its all-time high reached in January last year.The dramatic gains in stock prices stem mainly… Source link

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A dovish Fed and other central banks could save emerging markets from a repeat of last year’s turmoil

Exactly a year ago, developing economies were in the throes of a severe sell-off triggered by the escalation in trade tensions and the surge in the US dollar. The sharp decline in emerging market assets over the past month has worrying echoes of last year’s turmoil.Within a two-month period, beginning on April 1, 2018, the MSCI Emerging Market Equity Index – one of the main gauges of stocks in developing nations – fell just over 8 per cent. This year, the index has already lost 7 per cent since… Source…

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US stocks are booming, volatility has collapsed and the Fed is dovish. Why do investors remain cautious?

At the end of last year, global equity markets were a sea of red. Following a brutal sell-off that began in early October, stocks in both developed and developing economies finished the year deep in negative territory, with emerging market shares suffering double-digit price declines.Yet since Christmas Eve, the benchmark S&P 500 index has shot up nearly 25 per cent. On Tuesday, the index surpassed its previous closing high on September 20, 2018. Other major asset classes, which also suffered… Source link

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Yen boost an unwelcome gift from the Fed’s dovish turn

Last week’s indisputably dovish turn by the Federal Reserve prompted a sell-off in the value of the US dollar, including against the Japanese yen. Yet the outlook for the Japanese economy doesn’t look that rosy. Indeed, such are the economic clouds hanging over the Land of the Rising Sun, it is not that easy to make much of a case for the yen. In Japan, the Heisei era will give way to a new imperial age at the end of next month, when Crown Prince Naruhito accedes to the Chrysanthemum Throne…

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Hong Kong’s home buyers return in droves as banks kept mortgage rates unchanged amid a dovish monetary policy

Hong Kong’s property buyers are back in droves, as commercial banks kept the city’s mortgage rates unchanged amid a dovish policy stance by the local monetary authority.Across the city, four property projects with 891 flats in total were offered for sale in Lohas Park, To Kwa Wan, Yau Tong and West Kowloon in the biggest weekend launch in a year. As of 4:30pm, 447 of the total offering, or just over 50 per cent, had been sold, according to sales agents.“The purchasing power accumulated from… Source link

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Blink and you missed it. Instead of falling, Hong Kong home prices are back on the rise, stoked by dovish Fed

Property watchers across Hong Kong are scrambling to keep pace with what appears to be a resurgent property market, as anecdotal evidence emerges that some sellers are raising prices after the US Federal Reserve signalled a dovish monetary policy stance for the foreseeable future earlier this week.The sentiment shift follows the pivot by the Fed on Wednesday amid what it sees as slower US economic growth. In addition, Chief Executive Carrie Lam Cheng Yuet-ngor expressed concern that the firming… Source link

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The Federal Reserve’s dovish stance might not last as long as exuberant investors expect

It has been a wild ride in markets, with global equities falling by 17 per cent between early October and late December, only to regain almost all of that in 2019.In hindsight, we can now discern the two principal drivers of those serious market moves, which should help us figure out where markets may go from here.First, global economic activity late last year took a much bigger hit from the US-China trade war than most analysts had anticipated. This was partly due to actual tariffs introduced,… Source link

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Fed’s dovish policy will not erase carry trade risks in Hong Kong dollar, analysts say

The Hong Kong dollar’s rebound on Thursday after the US Federal Reserve surprisingly decided to halt its interest rate increases will only be temporary because traders will continue to exploit the gap between Hong Kong and US market interest rates trade activities conducted by traders as global central banks turn to similar looser monetary policies to combat the global economic slowdown, analysts said.The US dollar fell against Asian currencies, including the Hong Kong dollar, following the Fed… Source link

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As central banks turn dovish, how loose will this year’s monetary policy be?

In the middle of November last year, the yield on one-year Chinese government debt fell below its American counterpart for the first time ever, according to data from Bloomberg, dropping to 2.5 per cent as Beijing’s shift towards more growth-supportive measures gathered pace. The yield gap between the two countries’ 10-year bonds had also narrowed sharply, dropping to just 30 basis points as the divergence between Chinese and American monetary policy gained momentum. It was not just the Federal Reserve and the People’s Bank of China that were parting ways.…

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China and Hong Kong stocks buck US rally as trade talk, economic outlook worries outweigh Fed’s dovish tone on rate hikes

China and Hong Kong stocks both dropped on Thursday, as doubts on the progress of the trade talks overturned the optimism from a day earlier and concerns about the strength of the mainland’s economic growth offset the dovish tone by the Federal Reserve on the prospect of interest rate increases. The Shanghai Composite Index slid 1.3 per cent and the Hang Seng Index lost 0.9 per cent. The declines bucked gains on major benchmarks elsewhere in Asia that took cues from a rally in US equities on Wednesday. US stocks…

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