ASX set to open lower as the IMF tips global economic slowdown

Stock Markets

Australian shares are set to edge lower today as the International Monetary Fund (IMF) warns that the global economy is weakening at a “faster than expected” rate. The IMF cut its global growth forecasts for 2019 and 2020 and suggested that the recent weakness in economic data around the world is likely to persist over the coming months. Wall Street was closed as it was a public holiday in the US. Meanwhile European equities closed mostly lower yesterday, and the ASX is likely to also experience a similar reaction to this news.

China’s fourth quarter GDP data was released yesterday and showed that its GDP grew by 6.4% compared to the previous year. This was the slowest growth that China has experienced since the global financial crisis. However, this figure was in line with economists’ expectations for the quarter. ASX 200 futures are currently down 22 points. 

Hard Currencies

The spot price of gold fell $3 on on Monday and is now hovering around US$1279.60. From a technical perspective, it still remains in its medium-term uptrend despite the recent pullback.

Commodities

Brent crude prices have benefited from hopes that OPEC will manage to achieve production cuts and easing trade tensions between the US and China. It seems to be continuing its’ rally and has retested and broken through the recent high of US$63 per barrel hitting a new recent high of US$63.13 per barrel before closing at a new high of US$62.81 per barrel.

Fiat Currencies

The AUD (against the USD) posted marginal gains rising to 71.58¢ (+0.01%). Any further news regarding the US lifting tariffs on Chinese imports will likely result in the AUD going up.

The US dollar held around a two-week high. The dollar index traded steady at 96.308¢. “The drivers for the recent rally with the US dollar have been a strong start to earning season in the US, robust employment data, and accommodative monetary policies globally trying to ease the worldwide economic weakness,” noted Edward Moya at OANDA 1.

This article was written by Mithun Fernando – Investment Analyst, Rivkin Securities Pty Ltd. Enquiries can be made via mithun.fernando@rivkin.com.au or by phoning +612 8302 3633. 

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