The latest Reuters poll shows that the United States is headed for a major rally in the stock market this year. However, China's economic growth is expected to slow to a near 30-year low this year and cool further to 5.9% in 2020.
Nickel and copper are the bull stand-outs
A recent reuters poll of 13 analysts showed that copper and nickel have become the metals to watch. Copper is in the running for best base metal, while nickel takes the crown for best metallurgical metal. This is aided by a slew of high profile projects in the works including Vale's US$1.7 billion expansion of its Voisey's Bay mine in Canada and the looming China vs. USA trade war.
The nitty gritty is a bit of a quandary, given the myriad projects in play. One question lingers: which is king in the long term?
Nickel and copper are a couple of the country's most prized minerals, and as such, are likely to remain so in the years to come. With the likes of copper, lithium, and uranium, this is a metal dominated world.
China's economic growth is expected to slow to a near 30-year low this year and cool further to 5.9% in 2020
The Chinese economy is in a long-term decline. However, the country has shown resilience so far. Its GDP growth last year was better than many economists expected. As the economy continues to recover, policymakers are signaling that they are focusing on increasing investment and consumption. This is in addition to efforts to tackle inequalities in access to quality healthcare and education.
But China is also at risk of further slowing due to tighter global financial conditions and geopolitical tensions. And while the economy is projected to rebound in 2023, it is also vulnerable to further tightening.
In January, the World Bank revised its global growth forecast downward to 2.9 percent in 2022 from 3.0 percent. Global inflation was revised upward to 6.6 percent from 5.9 percent.
U.S. stock market indexes are set for more gains by the end of this year
A Reuters poll of Wall Street market strategists predicts the S&P 500 will continue to rally through the end of the year. Most of the strategists surveyed see a better economic outlook. They expect earnings growth to rise, but they're also worried about a mild recession.
The S&P 500 has climbed over 70 percent since hitting its March low, and most of the strategists in the Reuters poll see the index ending the year well above its current level. Several are predicting the index will rise more than eight percent for the year, while others are more optimistic about the outlook.
Although the Fed has raised interest rates several times this year, inflation remains stubbornly sticky. This has led many to fear that rate hikes will push the economy into a recession. But there are signs the U.S. is bucking the trend.
Biden's approval rating has sunk to a new low
The 46th president of the United States has reached an all-time low approval rating. US President Joe Biden's public approval rating fell to the lowest level of his presidency last week, according to a Reuters/Ipsos poll.
The poll, conducted February 2-3, showed that 42% of Americans approve of the job Biden is doing, while 58% disapprove. It also found that 57 percent of those under 30 years old disapprove of the job he is doing.
The Reuters/Ipsos poll shows that President Joe Biden's approval rating is the lowest it's been since August. That's a clear warning sign for the Democratic Party, which is expected to lose at least one chamber of Congress in the November 8 elections.
In the poll, 58% of respondents disapprove of the president's job performance. This includes 63 per cent of those surveyed who disapprove of the president's handling of the economy, and 69 per cent who disapprove of his handling of inflation.
QE2 news is a ‘one and done'
The Federal Reserve announced a plan to purchase $600 billion in government bonds, dubbed QE2. It's not a new round of QE, but it's a step beyond the previous program.
As expected, the market reaction was muted. Investors were more focused on what the new buys would mean for the economy.
Still, the Fed's announcement did the trick. Markets have mostly priced in the impacts of the new programme, and the Fed's decision is now baked into the dollar.
Some economists say the new buys will help boost the economy. But growth is likely to be modest. And inflation will not rise as quickly as hoped.
There are several reasons to believe the Fed has already been making the most of the opportunity to buy government bonds. Specifically, the central bank has cut borrowing costs to near zero since December 2008, enabling banks to borrow at extremely low rates. In addition, consumer spending has increased recently.
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