Apr 8, 2016 | Investment Advice

International News (Issue 394) – 8 April 2016

Though global sharemarkets were poor again this week, the newsflow at the margin seemed to improve.

In China, last months Foreign Exchange reserves improved month-on-month, indicating some degree of short-term success by the authorities there in managing risks of a currency run.

Oil prices also pushed higher after the Kuwaiti’s gave hope for a workable resolution to falling oil prices from the upcoming April 16th OPEC meeting.

Economic data from March in the US continued to improve, both from a manufacturing and services perspective and employment there also continues to power ahead.

This is good news, particularly against the backdrop of a dovish Federal Reserve.

The US Federal Reserve released the minutes from its recent meeting this week and though there were several committee members keen to tighten rates, the consensus position remains one of caution insofar as rate tightening.

The confluence of a dovish Federal Reserve and improving growth and inflation expectations is something I find hard to be negative on in the near term.

Despite the many positives this week, the mood remained negative. In Europe and Japan particularly, the concerns were very much currency driven, with the Euro and Yen both significantly stronger (in response to the more dovish Federal Reserve outlook for US interest rates).

In Europe too, the looming BREXIT vote in the UK slated for June is seen as a real dark cloud hanging over sentiment. It seems unequivocally negative for sentiment and activity if the unthinkable occurs and the British vote to leave the European Union.

In the coming weeks, US and European quarterly profit season kicks off, which will be the feature for equity markets.

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