In spite of the tensions over North Korea, investors are trying to pick up any positive signal from the USA, China and Europe.
Though European and UK markets have been below their best levels, they are still attracting investors. This article reveals the reasons why this happens.

Faded political concern

Several of Donald Trump`s proposal caused concerns and doubts on his ability to pass the main reforms, especially in healthcare. However, some investors believe that Trump has probably started to realize the seriousness of his position. Anyway, Europe seems more stable in this concern and is expected to be welcomed by marketers, taking into consideration the recent events, like French presidential elections and Angela Merkel, being a German chancellor, is likely to keep her position in the coming German poll.

Ease of North Korea tensions

Missile tests in North Korea and its tensed relations with the USA provoked a knee-jerk reaction among markets.

Still any happened decline has been recovered quickly. A chief market analyst at CMC Markets, Michael Hewson, reported: “Tensions with North Korea are likely to remain a distraction, however markets appear to be becoming desensitised to them at this time, and short of shots being fired, these tensions are likely to have fairly short term and short lived effects.”

Central banks don`t rush to end low rates and QE

It`s been years now that central banks have been supporting markets, expecting that the earned profits will be invested into domestic economies. Central banks are beginning now to turn off the money taps and are taking such an approach that it has eased the fears of investors of an unexpected policy change. Since last December the interest rates have been raised by the US Federal Reserve 3 times, and still another raise is expected in December of this year. The raise probability is high due to the recent uncertain figures of the US economy and the 2 recent storms. At the meantime the Bank of England may raise the rates in November. According to the Bank governor, Mark Carney, any rise will be gradual and limited. In regards to the European Central Bank, this has hinted that it will begin ending its bond buying program, but it is in no hurry to do that.

Euro zone economy growing

The ECB is likely to consider ending the stimulus program and the favorable economic picture in Europe is the reason. The financial crisis hit especially the weaker economies: Spain`s, Portugal`s and Greece`s. But the situation has started to change and the growing percentage rate has achieved the point of 2.3% compared with the US growth rate 2.2%. Finally, the reforms, though painful and slow, are gradually giving results.

Chinese economy on hold

The world`s second largest economy seems to be holding up. The slowdown in China would affect greatly on the world growth. The August statistic`s results show that industrial production and retail sales decreased comparing to the previous month. Nevertheless, analysts affirm that China is still growing and its currency continues strong.

Rate this!
[Total: 3    Average: 4.7/5]

Leave a Reply

Your email address will not be published. Required fields are marked *