Stock Market Focus on Central Banks Amid Mixed Chinese Data and Low Eurozone Inflation

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Stock Market Focus on Central Banks Amid Mixed Chinese Data and Low Eurozone Inflation

Stock Market Focus on Central Banks Amid Mixed Chinese Data and Low Eurozone Inflation


Travelling across China is always an eye opening experience when you consider its size, the gap between rich and poor and the sheer volume of bureaucracy it takes to make anything happen.

Down in Shanghai, a clampdown on corruption among Government officials is taking root and the country's growing middle class is spending money like there's no tomorrow.

However, the news coming out of the world's second-largest economy continues to be mixed and some economists I know have suggested that Beijing may struggle to hit its 7.5% growth target this year.

I've been hearing the same mixed messages about the wider global economy and several experts believe that factors like high unemployment, public debt and geopolitical tensions, most notably in Ukraine, continue to pose huge risks to stock markets.

Lagarde Piles Pressure on the ECB

Christine Lagarde, Head of the International Monetary Fund, last week urged the European Central Bank to loosen its economic policy to stave off the threat of prolonged 'low-flation' and the downsides it could bring.

Shortly after, ECB President Mario Draghi issued a scathing response, yet the pressure for Europe to pump money into the economy continues to grow, so watch this space.

Across the pond, economists insist that the Federal Reserve will push ahead with tapering even though recent economic data has not been so good.

In the UK, the spotlight remains firmly on the housing market and whether a fresh bubble is building.

Prices are 18% higher in London and more than 9% in the rest of the UK than a year ago, according to Nationwide.

If the Chancellor is not concerned yet, he ought to be.

A Golden Squib

At the start of the year, almost every expert I know expected gold to slump, yet for a time it was the best-performing asset class.

However, the precious metal has now fallen in price for three weeks in a row.

This is despite worries about deflation in the Eurozone.

I suspect that the price will continue to be a damp squib, with the potential introduction of stimulus measures by the ECB likely to prevent any large falls.

Things are not great elsewhere, with the Reserve Bank of Australia's index of commodity prices hitting a four-year low last week because of a fall in coal and iron ore prices.

These products are vital for the Australian economy and the index is likely to fall further in the coming months.

Soft Commodities Slip as the Weather Improves

Coffee prices have been on the slide after hitting a two-year high in mid-March, as the weather improves in Brazil, the world's largest exporter.

Weather forecasts are now predicting much needed rain.

This all highlights the risk of investing in soft commodity markets.

It is very difficult to predict the weather and this can leave investors rushing to close positions when the situation changes.

Cotton also looks set to see some weakness after US farmers revealed that they had planted 7% more acres this year.

That's all for now, time to tie up a few loose ends in China before I head home later this week.

One person I don't expect to see on my flight is Mike Ashley, with the billionaire trying to de-rail Sanpower Group's takeover of House of Fraser.

He's not popular in these parts just at the moment.

Until next time...




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