Get in touch - Bank of Valletta - BOV Group
Customer Service Centre - Bank of Valletta - BOV Group
  • ... >
  • ... >
  • BOV Prepaid Cards Christmas 2017 ... >
  • ... >
  • ... >
  • ... >
  • ... >
  • ... >
  • ... >
  • ... >
  • ... >
Maximise Banner
Minimise Banner
next Previous
next Previous
next Previous
next Previous
BOV Market Watch - Week Ending 24 November 2017
24 Nov 2017

Eurozone business indicators roar ahead. An end to strong growth does not seem to be anywhere in sight in the Eurozone, at least in the near term. The Purchasing Managers’ Index (PMI) for the service sector surged again in November to 56.2 after a reading of 55.0 that was registered in October. The November reading is only two points below the high in April. On the other hand, its counterpart for manufacturing also topped the previous month’s high level to 60.0 after 58.5 registered in the previous month. These data show that the European Central Bank’s (ECB) hugely expansionary monetary policy is having more and more of a visible impact on the real economy and make it easy for the bank to justify its reduction of the bond buying programme in 2018 (see next article).

ECB minutes show broad agreement on reduction of bond-buying programme. The minutes of the October meeting of the ECB’s monetary policy committee showed that the majority of policymakers supported the extension of the asset purchase programme for a further nine months until the end of September 2018. This amid robust and broad-based economic expansion in the bloc, an uptick in underlying inflation and the continued effective measures by the ECB's policy measures to the financing conditions of the real economy. Members widely shared the view that continued solid and broad-based expansion of the Eurozone economy, amid supportive financing conditions, would eventually head inflation to levels consistent with the ECB's medium-term inflation aim, the minutes showed.

U.K. budget sets aside £3bn for Brexit, cuts growth forecasts. In the U.K.’s Autumn Budget, British Chancellor Philip Hammond set aside an additional £3 billion over the next two years to aid the process of the country's exit from the European Union. At the same time, he slashed the growth forecasts for the next few years mainly due to a significant downward revision to potential productivity growth. The projections, made by the Office for Budget Responsibility (OBR), showed that the U.K. growth outlook for this year was reduced to 1.5 percent from two percent. The forecast for next year was slashed to 1.4 percent from 1.6 percent and the projection for 2019 was cut to 1.3 percent from 1.7 percent. The forecast for 2020 was reduced to 1.3 percent from 1.9 percent. The OBR attributed the projected slowdown in growth to intensified public spending cuts and the adverse impact of Brexit-related uncertainty on economic activity.

A December rate hike in the U.S. is still on track despite low inflation. A December rate hike by the U.S. Federal Reserve (Fed) is still the most likely outcome. According to the minutes of the Fed’s last monetary policy committee meeting, which took place at the start of this month, "many participants thought that another increase... was likely to be warranted in the near-term". Otherwise, the minutes divulge little that is not already public knowledge. Fed officials are still trying to figure out why wage growth and inflation remain so low when the unemployment rate is approaching 4%. "Many" participants judged that "much" of the recent weak price inflation "reflected temporary or idiosyncratic factors". But it could also reflect "the influence of developments that could prove more persistent". At the dovish end, Fed officials are worried that inflation expectations will continue to trend lower, while at the hawkish wing there were concerns that financial imbalances could be building.

U.S. leading index jumps more than expected. A report released by the U.S. Conference Board this week showing a much bigger than expected jump in its index of leading economic indicators in the month of October. Indeed, the Conference Board said that its leading economic index surged up by 1.2 percent in October after edging up by a revised 0.1 percent in September. Economists had expected the index to increase by 0.6 percent. The much bigger than expected increase in the leading economic index reflected positive contributions from nine of the ten indicators that constitute the index. The only negative contributor was manufacturing new orders for non-defence capital goods excluding aircraft.

Moody's upgrades India on reform progress. Credit rating agency Moody's Investors Service last week raised the sovereign ratings of India for the first time since 2004. Moody’s cited economic and institutional reforms as reasons for the upgrade. The rating was lifted to Baa2 from Baa3 while the outlook was changed to 'stable' from 'positive'. The upgrade has placed India's rating at par with those of Italy and the Philippines. While India's high debt burden remains a constraint on the country's credit profile, Moody's said that the reforms put in place have reduced the risk of a sharp increase in debt. The Indian government is currently implementing a wide-ranging programme of economic and institutional reforms.


Disclaimer. This documents is issued by Bank of Valletta p.l.c. (the Bank) for information purposes and personal use only. This document is not and should not be construed as an offer or recommendation to sell or solicitation of an offer or recommendation to purchase or subscribe for any investment. This information may not necessarily be appropriate and suitable to your particular investments requirements and risk profile. It is therefore recommended that if you require investment advice or wish to discuss the suitability of any investment decision, including if the financial instrument being considered in this research note carries a higher risk than your risk profile, you should immediately seek financial, legal or tax advice from your professional advisers as appropriate. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. The Bank has obtained the information contained in this document from sources it believes to be reliable but it has not independently verified the information contained herein and therefore its accuracy cannot be guaranteed. The Bank makes no guarantees, representations or warranties and accepts no responsibility or liability as to the accuracy or completeness of the information contained in this document. The Bank has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated therein, or any opinion, projection, forecast or estimate set for the herein changes or subsequently becomes inaccurate. Income from an investment may fluctuate and the price or value of the financial instrument described in this report, either directly or indirectly, may rise or fall. Furthermore, past performance is not necessarily indicative of future results. Bank of Valletta p.l.c. is licensed to conduct investment services by the Malta Financial Services Authority.

Share this item:
Print page
Sort reviews by:
This item has no reviews yet.
My Guide has identified the following related material
next Previous
 
BOV Pjazza
next Previous