According to analysts at TD Securities, globally improving prospects in the DM PMIs, a recovery of global trade, rising EM IP, and a stable bottom in year-ahead forecasts bode well for broader market sentiment.
Key Quotes
“Perhaps the major central banks have done what they set out to achieve earlier this year, and the worst is now in the rearview mirror. Sentiment and growth look set to start improving and the global economy could be in for an on- or above-trend second half.”
“But of course, risks remain: the current uncertainty about the fate of US-China trade negotiations and worries about the US then turning its focus to negotiations with the EU. A deterioration in negotiations on either front could spell trouble for the global economy.”
“Inventories remain elevated in some EM Asian economies and might dampen production there in the near-term. And Europe has struggled with serial adverse shocks for the better part of a year. While the evidence suggests some stabilization and recovery, there is still limited support for any strong rebound. It is this lack of conviction that will likely keep some central banks, especially in the Dollar Bloc, cautious at the margin as we make up for lost ground over the last 6-9 months.”
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