China and Russia Looking to Drop US Dollar for Oil Payments

yuan-vs-dollarJust days after Beijing officially launched Yuan-denominated crude oil futures (which are expected to quickly become the third global price benchmark along Brent and WTI), Reuters reports China has taken the next major step in the challenging the US dollar’s supremacy as global reserve currency (and internationalising the Yuan) by paying for crude oil imports in its own currency instead of US dollars.
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Market Update

  • Geopolitical tensions rise over North Korea & Syria
  • March US non-farm payrolls reading disappoints
  • FOMC minutes spark equity declines
  • Eurozone PMI data reaches multi-year high
  • South Africa’s sovereign credit rating downgraded

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China’s Improving Economic Outlook

The risks of a hard landing in China have subsided as the strong economic data releases of January continue to support the country’s improving economic outlook. Exports, measured inchina US dollars jumped 16.7% year on year, from 3.1% in December and beat market calls for 10%, meanwhile imports remained robust at 7.9%, beating the market consensus once again. Inflation figures also surprised on the upside; PPI surged 6.9% to the highest level since March 2011 while CPI rose 2.5%, from 2.1% in December. ‘Seasonal factors’ could have contributed to the encouraging trade data; boosted by the timing of the week-long Lunar New Year beginning in January.

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Weekly Market Update

  • UK market hits twelve consecutive days of record highs
  • Sterling dips ahead of PM May’s Brexit speech
  • Dollar retreats following Trump press conference
  • Chinese trade data shows fall in exports
  • US small business confidence soars

James Klempster (CFA) of Momentum Global Investment Management shares his view:

As Barack Obama’s presidency began in January 2009 – deep in the market sell-off following the global financial crisis – it was reasonable to presume that his job was at best thankless and at worst almost impossible.  Yet, in many ways history may well tell us that his job was simple in comparison to that of his successor.  Obama rode to victory on a tide of optimism and expectation that set him apart starkly from George W. Bush.  Obama’s youth and eloquence stood him apart from the man he replaced.  During that time tensions and the risk of policy missteps were high, but equally expectations were low due to the volume of bad news.

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PortfolioMetrix Market Review and 2017 Outlook

A large computerised display of the Brit2016 was a year dominated by political upsets and upheavals but, despite the shocks experienced – fears of Chinese debt implosion, Brexit, Trump, various terrorist attacks, Leicester City winning the Premier League – it was an extremely strong year for markets overall. In fact, one of those years that beautifully illustrates the value of ‘time in the markets’, as opposed to ‘timing the markets’.
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Weekly Market Update

News this past week:

  • China’s economy grows at an annualised rate of 6.7% in Q3
  • European bank shares rise following uneventful ECB meeting
  • UK CPI jumps month-on-month
  • US dollar strengthens as company earnings season commences
  • Portugal’s sovereign bond rating avoids decisive downgrade

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Weekly Market Update

News this past week:

  • Dollar strengthens as market prepares for Fed rate hike
  • Inflation expectations rise in the UK
  • Bond yields rise amid tapering rumours
  • Chinese trade data disappoints, whilst inflation rises
  • Eurozone industrial production beats expectations

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