June 21, 2017
Asian markets rush with oil declines, at the same time MSCI says YES to China.
Asian markets have been bearish in Wednesday’s session, following the MSCI Emerging Markets Index’s affirmative response to gradually include most of the Chinese stocks in that index after several failed attempts.
The Agency indicated that it will include 222 companies with high market capitalization from next year.
The US dollar made a pullback, from the highs of the last month, against a basket of major currencies. The Dollar Index stood at 97,699 which is 0.05 lower than the previous figure. Oil prices down have had their weight. At the same time, the pound has suffered a sharp fall after the speech of Carney who said that there will be no interest rate hikes at the moment.
Gold has risen in the Asian session on Wednesday after touching the last five weeks’ lows in the previous session. It has been influenced by the declines in the American markets, by the fall of the dollar and by the fall of the oil.
Crude has had problems during the Asian session, standing at lows of the last months. Investors do not give much credit to the OPEC and non-OPEC countries’ agreements on production cuts.
European markets are expected to open the session on Wednesday lower.
THE PROBLEM OF INFLATION
There is no confidence that the price of oil will stabilize. There is also no confidence in the producers, so that they can agree to increase the price.
The increase in the price of oil would, in general, help inflation rise.
Reducing the above, several voices within the Federal Reserve say that inflation is not responding as it should. That is why there is no hurry to raise interest rates. However, other voices say that there are serious risks if interest rates remain very low.
We continue in a cycle of interest rate rises, but there is no reason to accelerate them too much. With this, the scenario of margin increases for the banking sector is further removed.
Here is an important correlation: At the same time as the price of crude falls, inflation decreases and the financial sector is also under pressure.
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