High-tech Sector Lifts Markets, Italy Remains a Concern

Asia is following this trend as early Wednesday trading is showing growth of around 0.5%. Conversely, shares in the financial sector are again under pressure due to the decrease in profitability of “safe” bonds. On the currency market the dollar index decreased on Tuesday by 0.2%, EURUSD overcame 1.17, GBPUSD managed to rise above 1.34, and USDJPY improved to 110.

Economic data dispels fears

The recent improvement in market sentiment is attributable to a series of strong data release, including the U.S. labor market data and Tuesday’s publication of non-production ISM. This activity indicator showed the improved acceleration of growth in the service sector. The survey also indicated that price pressure remains high. This band of strong data was supported Wednesday morning by the better than expected growth of Australia’s Q1 GDP by 1.0%  This is good sign thanks to impressive demand for metals and coal, which the country heavily exports, Attributing to approximately 50% of the growth in the economy in the first quarter of 2018.

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Italy still on the radar

Whilst Italy has ceased to be the main cause of turbulence in global financial markets, the ongoing political problems in the country have remained a concern for investors. The plans of the new government imply an impressive increase in budget expenditures, which deters investors because of the huge debt burden of the country and anemic growth rates (just 0.5% per year on average for the last 20 years). News from Italy sparked a new round of sales of its debt with yield increase in profitability of 10-years obligations from 2.54% to 2.80%. Yields of U.S. and German debt decreased during the day, suppressing the dynamics of the securities of the financial sector.

This article was written by FxPro

Published by

Ed Anderson

Ed Anderson has over 35 years of experience in the financial markets, having worked in London, New York, Toronto, Singapore & Australia. His early career saw him as an Interbank Trader, Futures Trader & Voice Broker before he moved to electronic trading in the early 2000s. With extensive knowledge of leverage platforms and instruments and as the Chief Market Strategist at FxPro, Ed provides in-depth Fundamental and Technical Analysis, as well as frequent market insights on multiple asset classes, to the benefit of FxPro clients.