The global economy performed better than most expected in the first-half of 2016, as the world’s largest diamond jewelry market, the U.S., held back on further rate hikes, and policy in China, the world’s fastest growing diamond jewelry market, promoted credit creation.
The U.S. Federal Reserve Bank has leaned on the side of more-dovish policy so far in 2016 after raising the fed funds rate last December, for the first time in 9 years, which fueled the S&P 500 to a new all-time high in early June after marking a multiyear low in February.
China responded positively to government stimulated credit support which stabilized what had been a volatile 2015 for Chinese property and financial markets. China’s most economically advanced regions, driven by service sectors, such as Shanghai and Beijing metro areas, have showed the most improvement, but the less-developed, industrial-driven regions, primarily in the northern portions of the country,continued a lagging growth trend that first became apparent last year.
In late June, the U.K. referendum to leave the EU passed, which has since sent the pound down 11% against the dollar, and led to the BOE cutting rates on August 4th for the first time in 7 years.
In the U.S. and China in particular, service sector growth trends have outpaced manufacturing, which typically suits consumer demand for luxury discretionary commodities like diamonds, more so than industrial/construction commodities, like base metals and energy.
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