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World stocks bet on 'goldilocks' scenario

Tuesday, August 01, 2017 - 01:43

World stocks, on their longest streak of monthly gains in more than a decade, rise amid further data signals that the global economy is in fine fettle. David Pollard reports.

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Another step in the march upwards for world stocks. As the upbeat numbers continue. China's manufacturing: unexpectedly expanding at the fastest pace in four months in July. Masking concern over weaker performances in Asia's emerging markets. And longer-term - concern over China itself. SOUNDBITE (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING: This infrastructure boom which we've seen in the first half of the year is unlikely to continue as much in the second half of the year. We'll probably see a slowdown in growth then and then it's the impact that it has on the smaller economies that starts to become a bigger concern. Elsewhere, better than expected jobs data points to a German economy in vibrant health. And the latest numbers show euro zone growth at a robust 2.1 per cent in the second quarter - amid strong manufacturing and export readings. But for the euro zone too, there are caveats. SOUNDBITE (English) OANDA SENIOR MARKET ANALYST, CRAIG ERLAM, SAYING: The recovery is extremely fragile. There are certain headwinds facing the euro zone and the global economy as a whole and that's one of the reasons why the European Central Bank is going to have to continue to be extremely careful when it's unwinding this stimulus. Right now, investors appear little worried - pushing most major indices close to or beyond record highs. Traders are betting further Fed hikes might not be quite so near after all. While volatility indicators - or as some call it the 'fear gauge' - are not far from last week's record lows. And - after upgrading its China and euro zone outlooks - the IMF sees a punchy three and half per cent global growth rate this year. For those seeking the elusive 'goldilocks' scenario: not too hot, not too cold, but just about right to create jobs - but not runaway inflation.

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World stocks bet on 'goldilocks' scenario

Tuesday, August 01, 2017 - 01:43