Economic Indicators & Central Banks:
- Futures for both US and European equities declined, mirroring the drop in Asian stocks, as an adjustment to China’s mortgage reference rate did little to alleviate worries surrounding the world’s 2nd largest economy.
- China implemented a record rate cut, reducing the 5-year loan prime rate by 25 basis points to 3.95%, surpassing economists’ expectations of 5 to 15 bp cuts.
- The RBA maintained its cautious stance, further suggesting that rate cuts were not imminent. Minutes from the central bank’s February meeting, released today, indicated that policymakers require additional time to ascertain if inflation is indeed decreasing before considering any potential interest rate hikes.
- Market sentiment outside China weakened as expectations for US rate cuts dwindled following higher-than-expected producer and consumer prices.
- Today: The Canadian inflation and European wages data, which are expected to influence market movements going forward.
Market Trends:
- Nikkei (JPN225) retreated by 0.3% from its recent highs.
- US Treasury yields edged up slightly, with S&P500 (USA500) futures and European futures both declining by 0.3%.
- BHP Group, the world’s largest miner, reported $6.57 billion in underlying profits, less than consensus estimates, and stated demand from top customer China was healthy despite weakness in housing.
Financial Markets Performance:
- The USDIndex strengthened broadly surpassing 150 Yen, amid expectations of sustained higher US interest rates, despite Japan’s recession and uncertainty over its monetary policy exit.
- The Aussie, often viewed as a proxy for China’s economic health, remained largely unchanged, while iron ore futures, linked to Chinese construction demand, declined by 3%.
- The Yuan initially dropped to its lowest level in 3 months but stabilized at 7.1981 in the Asia close.
- Gold was little changed after edging higher Monday to trade around $2,020 per ounce.
- The USOIL edged higher against the backdrop of ongoing tensions in the Red Sea, a vital trade route. It is retesting again the January’s high again.
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Andria Pichidi
Market Analyst
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