Sean Burgess | PraxisIFM Asset Manager and Co-Founder Emirates HR
US ECONOMY ADDS 157,000 JOBS IN JULY
33,000 below forecast and well below June’s figure of 248,000, however the unemployment rate dropped back to 3.9 percent. The economy has averaged 215,000 new jobs a month over the last year and the Federal Reserve reclassified the economy as ‘strong’ from ‘solid’. The market is now pricing in that the central bank will hike interest rates at their September policy meeting.
UK HIKE INTEREST RATES TO 0.75 PERCENT
The second rate rise in a decade, with the 25-basis point increase widely expected, although not widely welcomed, by the market. The Bank of England governor Mark Carney said that any further changes would be “limited and gradual”. The new rate will mean higher borrowing costs for businesses and individuals, including those on flexible rate mortgages, although savers will benefit.
EUROZONE INFLATION HITS 2.1 PERCENT IN JULY
Above the ECB’s 2 percent target, due to higher energy prices over the month. However, with oil prices softening economists forecast inflation to drop in August. GDP for the second quarter came in at 2.1 percent, 10 basis points below forecasts and the slowest rate in two years, due to weaker export growth caused by the US-led trade war and general uncertainty in the global markets.
CHINA’S YUAN FALLS FOR EIGHTH STRAIGHT WEEK
Hitting a 14-month low on Friday, as global trade tensions continue to weigh on China’s already slowing economy. The yuan fell 1 percent against the greenback over the week, nearing the psychological rate of 7 yuan to one dollar, after China announced more retaliatory tariffs on 5,200 US products with the duties ranging from 5 to 25 percent on over $60 billion worth of goods.
OIL PRICES FALL ON RISING GLOBAL PRODUCTION
The fourth weekly decline in the last five, whilst US crude inventories unexpectedly rose to 3.8 million barrels in the previous week. In July, output from OPEC members rose 300,000 barrels a day, whilst Russian production sharply increased to 150,000 barrels a day month-on-month. WTI and Brent crude closed the week at $68.49 and $73.21 a barrel, respectively.
In other financial news:
- UK only G7 economy to decline in 2017, with the growth rate down 0.1 percent from 2016, with the ONS citing UK’s unsettled exit from the EU as the key factor.
- Turkey’s inflation rate hits 15.85 percent in July, due to rising oil & food prices and a weakening currency – the lira fell 6 percent against the dollar over the month.
- Bahrain’s debt issuer rating downgraded, whilst Moody’s maintained a negative outlook, due to the risk a $750m sukuk repayment in November will be missed.
- Apple becomes first $1 trillion company, beating Amazon to the coveted milestone, after a strong earnings per share report sent the stock surging 8 percent.