Global equities rallied to two-month highs on Friday, helped by hopes of a postponed rate hike in the U.S. and additional stimulus from Europe and China. The benchmark MSCI world stock index advanced 1.4 percent, hitting the highest level since August 21. The global gauge has now gained 6 percent thus far in October and is set for the best month since 2011 after suffering sharp losses during the summer.
Data from Bank of America/Merrill Lynch showed emerging-market bond and equity funds both received inflows for the first time in at least 3 months, signaling a turn in investor sentiment after a bruising third quarter. Emerging bond funds received $400 million, the first inflows in 12 weeks, while emerging equity funds which have pared about $60 billion so far this year, posted their first inflows in 14 weeks, though just $700 million.
High Income Economies
The U.S. budget deficit narrowed to $439 billion in fiscal-year 2015, equivalent to 2.5 percent of GDP and the lowest level since 2007. Revenues rose by 7.6 percent, boosted by rising incomes and corporate profits, while expenditures increased by 5.2 percent, constrained by sequester. The budget was in surplus in September. Still, polarization on spending issues persists, and the U.S. Treasury reported that emergency measures to remain below the federal debt limit will be exhausted by November 3.
The Eurozone trade surplus widened to €11.2 billion in August from €7.4 billion a year earlier. Exports increased by 6 percent (y/y), led by chemical products, machinery and vehicles. Imports rose 3 percent, dampened by lower energy costs. Separately, the Eurozone returned to deflation in September, with consumer prices falling by 0.1 percent (y/y), the first negative reading since the European Central Bank expanded its bond-buying program.
Consumer prices in New Zealand rose by 0.4 percent in the third quarter of 2015 (y/y), faster than expected. Accelerated housing prices more than offset lower petrol prices.
China's construction equipment manufacturer Sany Group and Chint Group have unveiled plans to invest around $5 billion (nearly Rs. 33,000 crore) in India's renewable energy, construction equipment and housing sectors. Sany Group plans to invest $3 billion to generate 2,000 megawatts of capacity and generate 1,000 jobs from 2016 to 2020, while the Chint Group will invest $2 billion in solar power and equipment.
Zambia has awarded government workers salary increases of between 9 and 29 percent for 2016, ending a two-year freeze on wage rises, according to state radio quoting a senior government official and union leaders. Zambia did not give government workers salary increases in 2014 and 2015 following a budget overrun in 2013.
According to Finance Minister Patrick Chinamasa, Zimbabwe will seek fresh loans from the World Bank, IMF and African Development Bank (AfDB) as it struggles with slowing growth, subdued commodity prices and high unemployment.