Economic Indicators & Central Banks:
- The markets have significantly pared back rate cut expectations and the front end underperformed in a bear flattener on the increased pessimism.
- Japan: Core inflation picked up speed in February, surpassing the central bank’s 2% target, suggesting that conditions for ending negative interest rates are aligning.
- Deflationary China set an ambitious growth target at 5%, 5.5% urban unemployment & 3% inflation: Premier Li also announced a budget deficit of 3% of GDP and $138.9bn in special government bonds. That added pressure on officials for more stimulus and policy support to fight the property crisis and deflation! At the same time Chinese PMI came in lower than forecasts.
- Bloomberg forecast puts growth at 4.6% this year, which flags the challenges China officials are facing against the background of a struggling property market.
Market Trends:
- Wall Street finished with small losses, albeit after last Friday’s rally that saw all-time highs on the NASDAQ and S&P500, with weakness in energy, consumer and tech stocks offsetting strength in utilities and real estate.
- The tech-heavy NASDAQ slipped -0.41%, while the Dow was off -0.25% and the S&P500 fell -0.12%.
- Apple Inc down more than 2% on receiving a $2 billion antitrust fine in Europe.
- Tesla’s stock declined by more than 7% as shipments from the electric-car manufacturer’s China facility reached a 14-month low in February, partly due to disruptions caused by the lunar new year festivities and intensified competition resulting from a price war.
- US and European stock futures are in the red, after a largely weaker session across Asia.
Financial Markets Performance:
- The USDIndex was fractionally lower at 103.85 in spite of the eroding Fed outlook as gains in EUR and GBP outweighed the buck’s strength versus the other G10 peers.
- Yen holds steady within its 3-week range, currently at 150.40.
- BTCUSD holds largely in green, spiking to $68,800 highs. Its up around 57% this year, benefiting from flows into exchange-traded funds launched in the United States.
- Gold surged to $2115 as markets look ahead to Fed Chair Powell’s congressional testimony.
- USOil prices have corrected lower despite the confirmation that OPEC+ output cuts will remain in place through the first half of the year. International oil companies in Iraq’s semi-autonomous region of Kurdistan denied reports that there is a deal that would allow oil exports through the Iraqi-Turkey pipeline to continue. Markets are also keeping a close eye on talks about a possible ceasefire between Hamas and Israel. A Hamas delegation arrived in Cairo for the talks, but an Israeli official told CNN that Israel decided not to send a delegation to Egypt because Hamas had not responded to two Israeli demands.
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Andria Pichidi
Market Analyst
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