Solid Confidence Numbers Help Riskier Assets Remains Buoyed

European stock markets are moving higher as EUR and GBP weakened against the dollar, which helped European bourses to shrug off the weakness seen in Asia, where Hong Kong, in particular, was under pressure amid reports that the China Securities Regulatory Commission is suspending approval of mutual funds that plan to allocate more than 80% in Hong Kong-listed shares. Energy and mining stocks weighed on the overall performance in Asia, in Europe, the oil and gas sector index in the Stoxx 600 rallied led by Royal Dutch Shell, after the company said it will restore its full cash dividend and confirmed its buyback plan. This helped sector to ignore the dip in oil prices ahead of the OPEC meeting.

The German GfK consumer confidence remained steady at 10.7 in December, unchanged from the previous month. The full breakdown for November, when the headline reading declined over the month, showed a pickup in business expectations but a decline in income expectations and the willingness to buy. Readings remain at high levels, however, consistent with ongoing support from consumption to overall growth as the labor market continues to improve.

The OECD warns investors against overestimating growth outlooks

The OECD predicts world growth to peak at 3.7% in 208, before slowing down to 3.6% in 2019 and warned that “evidence continues to build that financial asset prices are inconsistent with expectations for future growth and the policy stance, exacerbating the risks of financial corrections and growth downdrafts”. US. growth is expected to accelerate to 2.5% next year from 2.2% this year, Eurozone growth is seen at 2.4% this year and 2.1% next, Japan at 1.5% and 1.2% respectively and the U.K. at 1.5% and 1.2% in 2017 and 2018. At the same time the OECD sees growth slowing down across all these countries and regions in 2019.

Eurozone M3 money supply growth unexpectedly slowed to 5.0% year over year in October, from 5.2% year over year in the previous month. The counterparts, however, showed lending to non-financial corporations rose 1.7% year over year, up from 1.5% year over year in the previous month. Lending to households rose 3.2% year over year, after 3.1% year over year in September, with lending for house purchases steady at 3.4% year over year. So long growth continues to stabilize with corporate lending data suggesting that especially in the 1-5-year area loan growth is accelerating as companies try to lock in favorable interest rates. With ECB officials apparently also looking into further supporting the corporate bond sector any remaining investment weakness is clearly not due to a lack of funding opportunities, although for small and medium sized companies the ECB’s asset purchase program only lends indirect support via the banking channel.