Stronger IT, softer financials

High-tech lift markets Stock markets continue to strengthen with increased demand for high-tech companies. The NASDAQ100 closed a second day in a row at record levels. 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 Tuesdays 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.

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 has 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.