Asian stocks lead markets lower

European equities are trading lower with most indices around 1% lower following a weak opening to the start of the week. Asian bourses closed around 0.75% across the board as concerns over China and Japan re-surfaced.

In Japan, market expectations of easing have risen following media reports last week that the Bank of Japan is set to ease further during the meeting on Thursday. This week we also hear from Federal Reserve chairman Janet Yellen on Thursday. The April FOMC statement, due Wednesday, is unlikely to be a catalyst to reignite a dollar uptrend. This comes on the back on US Markit flash manufacturing PMI, which reached a seven-year low in April. Euro area April Flash PMIs indicate an ongoing moderate but unconvincing and fragile growth in the region.

China is making the headlines for the wrong reasons, as debt hit a new record increasing the risks associated with investing in the region. Debt in the world's second largest economy rose to a record 237% of GDP in Q1 of 2016. That has substantially increased the likelihood of a major recession in the country, economists warn.

Moving on to oil which is also dragging down the markets, Schlumberger CEO Paal Kibsgaard said "Activity fell sharply in the first quarter, as the industry displayed clear signs of facing a full-scale cash crisis," adding that: "We experienced activity reductions worldwide, with the rate of disruption reaching unprecedented levels." The CEO continued by saying that the whole industry is in a full-on crisis.

As a consequence of the reduced oil revenues, the IMF cut Gulf GDP growth forecast to 1.8% as the Oil-dependent region is forced to lower spending to contain fiscal deficits.

Related to the bond markets, The ECB will announce the weekly bond purchase volumes under the QE program later today. The ECB increased weekly volumes to about 20 billion euros this month from roughly 14 billion euros prior. Note that corporate bond purchases will only start in June.

In corporate news, Goldman Sachs is now offering a bank account for normal people. Goldman, probably the world's most well-known investment bank will now allow customers to open an online savings account with as little as $1.

Fiat Chrysler Automobiles (FCA) is targeting "significant double-digit growth" for jeep sales in China this year, said Mike Manley, Chief Operating Officer for the Asia-Pacific region, speaking at the Beijing auto show.

This article was issued by Simon Psaila, Treasury officer at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd. has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.