Saturday, July 13

Growing demand for safe assets: market overview

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Safe assets may return to the market

There is a slump in the US stock market. Indices are showing a downward trend, although they reached a maximum for four consecutive days. This situation is worrisome in view of the upcoming negotiations between the U.S. and China. Experts expect that their outcome will be favorable and part of the tariffs will be cancelled. The news is also reflected in the market demand, safe assets are becoming interesting again.
According to preliminary information, the Chinese side insists on the cancellation of tariffs, which were introduced on September 1. They assume a 15% duty on goods with a total price of $125 billion. In addition, Beijing wants to eliminate tariffs that apply to imports of products from the country, the amount of which is $250 billion.
There’s a waiting atmosphere at the stock exchange. The S&P500 index fell by 0.12% to 3075 points. Cyclical sectors increased, while protective ones decreased.
After a few days of growth, the world stock market is assessing risky and safe assets. Investors are analyzing how likely the success of trade negotiations is and whether the parties will agree to cancel tariffs. It is expected that the first phase of negotiations will take place in the USA, but the exact location is unknown.

Another issue that experts are concerned about is monetary policy. After reporting business activity, its easing is unlikely to be expected.
The picture on the Asian market is not quite happy. If on the stock exchanges Japanese index Nikkei and CSI 300 in Shanghai practically do not change values, the Hong Kong Hang Seng fell by 0.3%. The red sector starts trading on the European stock exchanges.
All this causes demand for safe assets, the value of bonds increases. As for U.S. Treasury bonds for 10 years, they fell to 1.85%. The price of gold is rising, although in recent trading for its ounce is asked below $1500. After correction, Brent oil is sold for 62.50 dollars per barrel. Experts expect the S&P500 index to continue its decline, but how much is difficult to say yet.
Reports from a large pharmacy chain CVS Health Corp. are scheduled for the near future. According to preliminary data, the company’s profitability will increase, so its shares will go up.
Chinese corporation Baidu’s performance for 3Q is lower than in the previous period, which is explained by the slowdown in the country’s economy. American Expedia presented a positive report, although some difficulties with Brexit are likely.
Experts do not rule out that the S&P500 index may decline to 3066 points.


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