Global Equities Rise as Week With Many Central Bank Meetings Kicks Off
March 18, 2024
Among the many central bank policy meetings lined up for the coming week, two questions loom in particular. Will the Fed reduce the number of likely rate cuts this year from three as indicated earlier? Possibly. And will the Bank of Japan Board end its negative 0.1% overnight interest rate target, which is deemed likely in light of ample wage gains awarded this year.
Two other items of interest to investors this Monday are the latest batch of monthly Chinese economic indicators released earlier today and the as-expected result of the Russian presidential election held over the weekend. Vladimir Putin was reelected in a contest decided before it began, as all serious potential competitors had been either killed, locked up and escaped the country. Putin will be 77 when this new six-year term ends in 2030.
Chinese retail sales in January-February were 5.5% higher than a year earlier. Although a tad above market expectations, that was the lowest on-year rise since September and matched the increase in January-February of 2023. Sales in calendar 2023 had risen 7.2%.
Chinese industrial production advanced 7.0% year-on-year in January-February, the most in two years and well above the average 3.6% rise in 2023.
A 4.2% increase during January-February in Chinese fixed asset investment also surpassed market expectations. Such was the biggest year-to-date increase since January-April of 2023.
Unemployment in China rose 0.1 percentage point to a 7-month high of 5.3% in February.
In pre-open trading, S&P 500 and the Nasdaq futures show gains of 0.8% and 1.2%, respectively. In other stock markets this Monday, share prices jumped 2.7% in Japan, 1.0% in Taiwan and China, and 0.7% in South Korea. Share prices thus far have risen 0.3% in Germany, Spain and Great Britain.
The dollar is 0.1% softer against the euro, sterling and swissy and unchanged versus the Japanese yen, Canadian loonie and Chinese yuan.
The 10-year U.S. Treasury yield is hovering at Friday’s closing level. British and Japanese counterparts have edged a basis point lower, while the 10-year German bund yield is up 1 basis point.
The price of Bitcoin has retreated 0.3% further after touching a record high last week, but oil and gold prices are up 0.6% and 0.1%.
Year-on-year Euroland consumer price inflation last month was confirmed at a 3-month low of 2.6%, but the 0.6% monthly rise in consumer prices was the most in 10 months. Core inflation in February slid 0.2 percentage points to a 23-month low of 3.1%. The drop in inflation to 2.6% from 8.5% one year earlier was concentrated in the food, energy and non-energy components, but sticky service sector prices are a remaining concern. Services accounted for 1.73 percentage points of CPI inflation last month, down only slightly from a contribution of 2.02 percentage points to CPI inflation in February 2023.
Euroland seasonally adjusted trade surplus doubled from EUR 14.3 billion in December 2023 to EUR 28.5 billion in January 2024. This largest surplus since at least 2018 stemmed from a 4% drop in imports but a 2.1% monthly rise in exports. The unadjusted trade balance swung from a deficit of EUR 32.6 billion to a surplus of EUR 11.4 billion one year later, with imports plunging 16.1% on year and exports rise by 1.3%.
Among other data release highlights today,
- Czech producer price inflation, which crested at a three-decade high of 28.5% in mid-2022, posted a second straight sub-zero reading at -0.9% last month after -1.8% in January.
- Britain’s Rightmove house price index went up 0.8% in March, the most in 9 months, lifting its year-on-year advance to a 10-month high of 1.3%.
- New Zealand’s service sector purchasing managers index printed at an 11-month high of 53.0 in February following 52.2 in January.
- Japanese core private machinery orders fell 1.7% in January after a 1.3% contraction in the final quarter of 2023. Export orders for machinery also declined (-4.4%), but public sector orders for machinery surged by 24.4%.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Japan, Chinese retail sales and industrial production, Putin
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