Dotted line
Continent jobs
The unemployment picture in the eurozone is becoming rosier after data released by Eurostat, the official statistics agency, showed the rate hit 10.9 per cent in July, down from 11.1 per cent in June and 11.6 in July last year. The 213,000 fall in joblessness means the rate is back to levels last seen in February 2012. The lowest unemployment rates in July were recorded in Germany (4.7 per cent), the Czech Republic and Malta (both 5.1 per cent), and the highest in Greece (25 per cent) and Spain (22.2 per cent). The largest decreases were in places including Spain (24.3 per cent to 22.2 per cent), Greece (27 per cent to 25 per cent) and Portugal (14.1 per cent to 12.1 per cent) - all of whom have received bailouts.
O Canada
Growth halted
The downturn in commodities seems mostly to blame for tripping the Canadian economy up. Official data showed the country, which had been growing strongly since the aftermath of the financial crisis, registered its second negative quarter of growth - agreed to be a technical recession. The numbers are small - a decline of 0.1 per cent in the second quarter after a 0.2 per cent fall in the first. But looking under the headlines is a portent to more concern. The mining, quarrying and oil and gas extraction sector posted a notable decrease of 4.5 per cent, down for a second consecutive quarter, according to Statistics Canada. Other factors included lower business investment and lower housing construction.
On the QT
Tightening up
We're all familiar with the acronym QE, or quantitative easing, but we have heard little about the counter - until now. Analysts at Deutsche Bank have suggested global foreign exchange reserves have peaked and will decline thanks to China's economic slowdown, US monetary tightening and the collapsing oil price. Also, China is now more willing to let its currency float, meaning it needs to trade less dollars, and the Bank of Japan and Swiss National Bank have moved away from currency intervention. And why does this matter? Well, Deutsche says the effect will be "profound", especially on global fixed income yields, which it says will rise meaning prices will fall.
Oil bounce
Dead cat?
The words of Opec - the Organisation for Petroleum Exporting Countries - were pored over nearly as closely as those of central bankers and caused a similar sized reaction. The fact the organisation "stands ready to talk to all other producers" suggested, in the minds of traders, there could be an easing of production which would push prices up. Regardless of whether this will happen, prices leapt 25 per cent in just three sessions with Brent crude hitting $49 a barrel at the time of writing compared to $42 on 24 August. But renowned oil bear, hedge fund manager Pierre Andurand, told says he believes prices will fall again, perhaps below $30 a barrel,
Deal blessed
Oil merger
The £55bn deal which will see BG Group (BG.) sold to Royal Dutch Shell (RDSA) has been given the all clear by Margrethe Vestager, the European Union's competition chief. The deal, agreed in early April, was, according to BG, given "unconditional" approval by the EU and will mean another deal under the sector's belt amid the volatile commodity market conditions. A record $314bn in deals have been announced in the oil & gas sector globally this year – more than double the figure for the same period in 2014.
Jobs growth
US strong
The crank turned a little harder on the Federal Reserve earlier this week after the US economy created 190,000 jobs in August, according to a survey by ADP Research. This is a rise from 185,000 in July but less than the 200,000 predicted by economists. The data will, however, be a point for the 'raise rates' argument as it shows the economy continues to power on in spite of a strong greenback depressing exports and the latest market machinations. Bond prices fell incrementally on the back of the data, which comes ahead of official figures on 4 September.
The rout in emerging markets won’t have been missed by even the most laissez-faire investor. In sterling, the MSCI Emerging Markets index is down more than 18 per cent in the past year compared with just a 1 per cent fall in the MSCI AC World index. Is it time to buy?
BlackRock’s global chief investment strategist Ewen Cameron Watt considered this – when EM equities were trading at 1.4 times book value, according to Morgan Stanley – to be near previous troughs but “close, but no cigar” in terms of a buy signal. The chart shows earnings per share fell by more than 25 per cent from a mid-2011 peak – “the longest earnings recession in emerging markets history”, according to MSCI data.
Of course, headline numbers can mask what is happening in individual countries and therefore portfolios.
