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Weekly Feed Mins Read

Kristal Weekly Feed I 27th May 2019

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Got only 15 seconds? Here’s what you need to know.
Below is a succinct summary of major global events that transpired last week.

Positives

  1. Gold prices steady after weak US manufacturing data
  2. U.S. weekly jobless claims fell even though the economy is slowing
  3. Singapore economy gains 3.8% higher than forecast of 2.3%

Negatives

  1. Theresa May resigns as UK Prime Minister
  2. US Manufacturing growth at its lowest level since September 2009
  3. Deutsche Bank shares at a record low

 

Now for more detail.

 

Positives

1. Gold prices steady after weak US manufacturing data

What You Should Know

Gold steadied on Friday, after rising more than 1% in the previous session en route to a weekly gain, in response to a weaker dollar and expectations for a U.S. interest rate cut, offsetting pressure from a rebound in equities. Spot gold gained 0.1% to $1,283.91 per ounce. Lower interest rates tend to support gold since it reduces the opportunity cost of holding non-yielding asset.

What You Should Lookout For

Uncertainty in the Middle East also supported Gold prices. Trump said he would send about 1,500 American troops to the Middle East, as a protective measure. Gold prices was supported by weak U.S. durable goods data and manufacturing activity data that increased worries that the trade conflict with China may hurt the world’s largest economy.

Suggested Reading:

PRECIOUS-Gold eyes weekly gain as dollar eases, bets for Fed rate cut grow

 

2. U.S. weekly jobless claims fell even though the economy is slowing

What You Should Know

Initial claims for state unemployment benefits slipped by 1,000 to adjusted 211,000 for the week ended May 18, compared to forecast of 215,000. Claims have now declined for three straight weeks.  This is pointing to sustained labour market strength even as the economy slows.

What You Should Lookout For

Retail sales and production at factories fell in April, while the housing market has mostly remained stable. GDP for Q2 have remained below 2% rate, whereas the economy grew at a 3.2% in the first quarter. The four-week moving average of initial claims, has dropped 4,750 to 220,250 last week.

Suggested Reading:

U.S. weekly jobless claims underscore labour market strength

 

3. Singapore economy gains 3.8% higher than forecast of 2.3%

What You Should Know

Singapore’s economy grew at a faster pace in the first quarter than the government previously estimated, pointing that its resilient towards weaker global demand and a worsening U.S.-China trade war. GDP rose an annualized 3.8% from the prior quarter, higher than the government’s earlier projection of 2% and above the forecast of 2.3%. Compared to a year ago, GDP rose 1.2%.

What You Should Lookout For

The government has narrowed its growth forecast range for 2019 to 1.5% to 2.5%. Exports have been hit by a downturn in the global tech cycle and subdued growth in China. Non-oil shipments fell down 10% in April compared to last year as electronic exports contracted 16.3%.

Suggested Reading:

Singapore’s Economy Gains 3.8% as Construction Rebounds

 

Negatives

1. Theresa May resigns as U.K. Prime Minister

What You Should Know

Theresa May resigned from her post of Prime minister effective 7th Jun, marking her three year journey to an end. Theresay May said she had done everything she could to convince members of Parliament to back her Brexit withdrawal agreement she had negotiated with the European Union.

What You Should Lookout For

Sterling rose 0.5% to climb above $1.27 after May’s statement, before giving up gains as investors digested the news. With no Brexit withdrawal agreement, the prospect of the U.K. leaving in disordered way from the European Union now seems more likely. UK’s official departure date from the European Union is set to be 31st October.

Suggested Reading:

Theresa May resigns as UK prime minister amid Brexit crisis

 

2. U.S. manufacturing growth at its lowest level since September 2009

What You Should Know

US manufacturing growth hit a multi year low in May, measuring its weakest pace of activity in nearly a decade and new orders fell for the first time since September 2009 as the US-China trade war intensified. The US Manufacturing PMI declined to 50.6 in May from 52.6 in April, marking the lowest level since September 2009 compared to a forecast of 52.5.

What You Should Lookout For

The weakness in manufacturing was similar to services sector where Markit’s flash Services Business Activity Index dropped to 50.9 in May from 53.0 in April, the lowest since February 2016. Trade wars remained on the top of the list of concerns among manufacturers, alongside signs of slower sales and weaker economic growth both at home and in key export markets.

Suggested Reading:

US manufacturing activity dives to more than 9-year low on trade war worries, survey shows

 

3. Deutsche Bank shares at a record low

What You Should Know

Shares of Deutsche Bank hit a record low of 6.37 Euros Monday, down nearly 3%, after UBS downgraded the stock to “sell” rating from “neutral.”  UBS slashed its price target for Deutsche from 7.80 euros to 5.70 euros saying that Deutsche Bank remains a levered market play vulnerable to external events and rising rates are currently a distant hope.

What You Should Lookout For

Deutsche Bank also faces pressure from investors to trim its IB division, after the collapse of merger talks with Commerzbank. Deutsche Bank has faced a variety of negative news in the past few years such as settlements with the U.S. Department of Justice, management reshuffles, weak earnings, constant restructuring, merger speculation and steep stock price falls.

Additional Information:

Deutsche Bank shares hit record low as UBS downgrades stock to ‘sell’

Disclaimer

The materials and data contained herein are for information only and shall in no event be construed as an offer to purchase or sell or the solicitation of an offer to purchase or sell any securities in any jurisdiction. Kristal Advisors does not make any representation, undertaking, warranty or guarantee as to the update, completeness, correctness, reliability or accuracy of the materials and data herein. All opinions, forecasts or estimation expressed herein are subject to change without prior notice. Kristal Advisors and its affiliates accept no liability or responsibility whatsoever for any direct or consequential loss and/or damages arising out of or in relation to any use of opinions, forecasts, materials and data contained herein or otherwise arising in connection therewith.

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