Investment Desk Bulletin

23 February 2016

Oil bounce helps risk markets

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By Sanjay Joshi

This week's IDB, 'Oil bounce helps risk markets', delivered by Head of Fixed Income, Sanjay Joshi, presents the house view on macro factors effecting the markets, with a focus on China, European banks and Emerging Markets, discussing the following points:

- Saudi Arabia, Russia, Qatar and Venezuela agreed to potentially freeze oil production at January’s levels, helping lift crude off its recent lows and improve global market sentiment. 

- After a week-long holiday, Chinese markets re-opened last Monday with the Renminbi rising to its strongest vs the USD after the People’s Bank of China (PBoC) set fixing at 6.5118.

- Data from the Developed World varied, although Japanese GDP contracted by 0.4% in Q4-15, and OECD revised its world growth forecast for 2016 down to 3.0%, from 3.3%.

- Minutes of January meetings for the Federal Open Market Committee (FOMC) and European Central Bank (ECB) delivered little additional information. The tone of the FOMC analysis of coincident economic data was constructive, but there was growing concern about the implications of the recent financial turbulence. ECB discussions focused on the rising risks to growth and inflation forecasts, reinforcing expectations of a March easing.

- Events in the UK have been dominated by the deal PM Cameron reached with the EU. It paves the way to the 23 June referendum, splitting the Conservatives; reducing Cable this morning to 1.41. 

- Brazil was downgraded by S&P for a 2nd time in less than six months to BB, from BB+.

Please click here to view the presentation.