|
 A looming snap election in Greece and a closely watched conference
hosted by the Federal Reserve in the United States are also likely
to keep investors on their toes in the coming week, in particular as
they look for hints on when the U.S. will raise interest rates.
Fears that Chinese growth is weakening, dragging down the global
economy with it, are hammering commodities and stocks.
Alarm bells rang out across world markets on Monday as a 9 percent
dive in Chinese shares and a sharp drop in the dollar and major
commodities panicked investors.
On Friday, a survey showed Chinese manufacturing slowed the most
since the global financial crisis in 2009 - adding to other worrying
clues about the country's health, including its falling exports.
China devalued the yuan earlier in August by pushing its official
guidance rate down 2 percent. The central bank has said there was no
reason for the currency to fall further, but investors are also
bracing for further interest rate cuts.
"It will be all eyes on the Chinese authorities for any further
policy support steps, alongside the People's Bank of China yuan
fixings and trading swings," analysts at Investec Economics said in
a note to clients.
China is also widely expected to relax reserve requirements ratios
for its banks again in the coming months, a measure intended to spur
lending by reducing the cash they need to hold. It is trying to keep
its economy on course to grow 7 percent in 2015 - its slowest pace
in a quarter of a century.
"We continue to expect a total of 100 basis points of reserve
requirement ratio cuts by end-2015, with the first cut likely to
take place within the next two weeks," economists at Standard
Chartered said.
The cash reserves ratio has already been cut three times this year.
EYES ON FED, GREECE
By the end of the coming week, attention may shift away to the Rocky
Mountains, where policymakers are due to gather from Aug. 27-29 for
the Fed's conference of central bankers, finance ministers,
academics and financial market participants in Jackson Hole.
Fed chair Janet Yellen is not expected to attend, raising the
prospect that other Fed officials may be more tight-lipped about the
likelihood of the first rate increase in almost a decade, some
analysts said.
The prospect of an increase as soon as September is receding,
however.
[to top of second column] |
Last week the Fed released minutes of its July meeting, giving no
clear signals as to the timing of such a move - which would affect
markets across the world and could cause more pain for emerging
market assets, already being hit by China's woes.
Though they were more confident about U.S. growth prospects, the
minutes showed, Fed policymakers are concerned about weakness in the
global economy - fears likely to have been heightened by Monday's
market rout in which the dollar also fell sharply.
Further clues on both matters should be gleaned from data releases
in the coming week, including second-quarter U.S. gross domestic
product figures due on Thursday.
Quarter-on-quarter growth in the period is expected to be revised
upwards to 3.2 percent from 2.3 percent, according to a Reuters
poll.
In the euro zone, investors will be looking at an German economic
sentiment survey due on Tuesday for a better idea of the scope of
the bloc's recovery.
Preliminary August consumer price readings for Germany and Spain on
Friday will provide further insight into how effective the European
Central Bank's bond-buying efforts have been at warding off
deflation.
But the spotlight will mainly fall once again on Greece, where Prime
Minister Alexis Tsipras has resigned. That opens the way for early
elections after he secured much-needed funds in the country's third
international bailout program.
The current Greek government aims to strengthen its position in the
election after accepting a rescue deal it once opposed. But that
creates more uncertainty for markets already on edge over whether
Greece will deliver on promised reforms and get its economy and
banks back on track.
(Additional reporting by Koh Gui King in Beijing, editing by Larry
King and John Stonestreet)
[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
