Stocks Drift Higher as Traders Contemplate Growth

August 15, 2016

The Bundesbank see Strong Q3 Growth.

This article is originally referred from iForex News

European yields are little changed, as stock markets are posting marginal gains, but while risk appetite remains underpinned, with stocks approaching levels that proved a stumbling block at the time of the last rally, markets seem hesitant to push things much higher without a clear trigger.

The data calendar was pretty empty and while the Bundesbank sounded optimistic in its latest monthly report and predicted strong, broad based growth for the third quarter and a limited fallout from the Brexit referendum, this also means reduced chances for bold easing measures from Draghi in September. The front end Nymex future is down from earlier highs above USD 45 per barrel, but remains up on the day, which continues to underpin risk appetite.

The Bundesbank see Strong Q3 Growth

Bundesbank sees strong, broad based growth in Q3. The German Bundesbank said in its latest monthly report that it expects strong, broad based growth for the third quarter, after the second quarter already turned out better than expected. The impact of the Brexit referendum on company expectations has been limited so far, which supports the view that at least in the short term the fallout for the German economy will be limited. At the same time above average capacity utilization should underpin a rise in machinery and equipment investment. The strong housing market is supporting construction investment and private consumption is likely to continue to drive growth amid the favorable outlook for wages and jobs, according to the Bundesbank.

UK negotiations with the EU on exit terms may be delayed. Unnamed sources are saying that government ministers have warned senior people in London’s financial center that negotiations with the EU, which will commence once the government invokes Article 50 of the Lisbon Treaty, won’t likely happen “until autumn 2017.” The expectation of most had been this to happen in January. Aside from this, the FT recently cited a senior EU official saying formal negotiations may not begin until late 2017, or even 2018, as the EU will need time and the agreement of 27 member states to set out a formal position after the UK invokes Article 50. Some EU officials have also said that it may tactically be in the UK’s interest to start negotiations once 2017 elections in Germany, France and the Netherlands are out of the way.

Original Source: iForex News

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