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Contractionary Monetary Policy: What is it and How Does it Work?

HAT IS CONTRACTIONARY MONETARY POLICY? Contractionary monetary policy is the process whereby a central bank deploys various tools to lower inflation and the general level of economic activity. Central banks do so through a combination of interest rate hikes, raising the reserve requirements for commercial banks and by reducing the supply of money through large-scale government bond sales, also known as, quantitative tightening (QT). It may seem counter-intuitive to want to lower

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Where do stocks go from here?

The summer rally has helped improve the outlook for stocks after a tough first half of the year, but both the bullish and bearish cases have powerful arguments supporting them. Source: Bloomberg   Indices Shares Commodities Inflation Market trend S&P 500

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Dividend Adjustments 15th August 2022 - 22nd August 2022

Please see the expected dividend adjustment figures for a number of our major indices for the week commencing 15th August 2022. These are projected dividends and likely to change. IG cannot be held responsible for any changes made. Dividends highlighted in red include a special dividend, therefore some or all of the amount will not be adjusted. Amount in brackets is the expected adjustment after special dividends excluded (where shown on major indices). Dividend adjustments due to be posted on

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US Dollar Delicately Climbs as Fed Re-Affirms Rate Hikes Post Data. Where to for DXY?

The US Dollar remains fragile after US PPI eased in July. In a remarkedly similar response to soft CPI data the day before, markets extrapolated a less hawkish Federal Reserve going forward. This notion was once again shot down, this time by San Francisco Federal Reserve Bank President Mary Daly in an interview with Bloomberg television after the New York close. She said that a 50 basis point (bp) lift to rates is her base case at the September Federal Open Market Committee (FOMC) meet

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CRUDE OIL, US DOLLAR, US CPI, WTI, BRENT, CHINA, HANG SENG, FED - TALKING POINTS

Crude oil is steady through the Asian session ahead of the all-important US CPI later today. This is despite the American Petroleum Institute (API) reporting that inventory of US crude increased by 2.2 million barrels last week, a large difference from the forecast 400k decrease. The increase in stockpiles may have been offset by news that a Russian oil pipeline to central Europe had been shut down last week. The WTI futures contract is near US$ 90 bbl and the Brent contract is above U

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Swiss Franc Firming Against US Dollar and Euro. Will Momentum Take CHF Higher?

EUR/CHF made a 7.5-year low at the end of last month at 0.9699, moving below the previous low of 0.9804. Since breaking lower, the price has not managed to reclaim 0.9804 and it may continue to offer resistance. The 21-day Simple Moving Averages (SMA)is currently at that level, potentially adding resistance. Further up, the recent peak of 0.9957 might offer resistance ahead of the break point at 0.9973. In the last session, the price has crossed below the 10-day SMA and remains be

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Investor Spotlight: Either/ore? Digging into the ASX’s mining giants

Shares Commodities Iron ore Mining Iron BHP   This issue of Investor Spotlight is brought to you by IG, with Kyle Rodda, Market Analyst and ausbiz presenter. For better or worse, the ASX is dominated by companies that mine one of Australia’s most abundant resources: iron ore. In this piece, we dig into the investment case for owning iron ore stocks, what’s driving these companies' shares right now,

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Rolls-Royce share price: half-year results

Rolls-Royce shares (LON: RR) sunk by 10% to 83p on Friday after half-year results spooked investors over long-running problems with supply chain issues and inflation. The FTSE 100 engineer has struggled to gain traction after the pandemic crash in 2020 saw its shares collapse from 236p in February 2020 to just 39p by October 2020. And after recovering to 147p by November last year, the Ukraine war combined with tightening monetary policy has seen it surf below penny stock s

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