Global Markets:
- Asian stock markets: Nikkei down 1.38%, Shanghai Composite down 0.99%, Hang Seng down 1.47%, ASX fell 0.68%
- Commodities: Gold at $1319.10 (+0.05%), Silver at $16.330 (-1.33%), WTI Oil at $62.73 (-0.44%), Brent Oil at $66.31 (-0.32%)
- Rates: US 10-year yield at 2.901, UK 10-year yield at 1.553, German 10-year yield at 0.676
News & Data:
- (CNY) Non-Manufacturing PMI 54.4 vs 55.3 previous
- (CNY) Manufacturing PMI 50.3 vs 51.2 expected
- (NZD) ANZ Business Confidence -19 vs -37.8 previous
- (USD) CB Consumer Confidence 130.8 vs 126.2 expected
- (USD) Durable Goods Orders m/m -3.70% vs -2.40% expected
- (USD) Core Durable Goods Orders m/m -0.30% vs 0.40% expected
- (EUR) M3 Money Supply y/y 4.60% vs 4.60% expected
- (EUR) Spanish Flash CPI y/y 1.10% vs 0.90% expected
- (EUR) German Prelim CPI m/m 0.50% vs 0.50% expected
- Japan lower house panel approves record 97.71 tril. yen budget for FY 2018
- BoJ Gov Kuroda: Monetary Easing Is To Achieve Price Target -Easing Will Not Continue If CPI Is 2Pct In A Stable Manner
Markets Update:
Asian equities traded lower Wednesday, as markets continue to digest Powell’s remarks. While the comments were mostly in line with expectations, hawkish takeaways from the Q&A was taken as an indication that there would be 4 rate hikes this year. Weaker manufacturing PMI data from China added to the woes, fuelling concerns about global economic growth.
Asian markets had opened slightly lower following Powell’s comments, but the sell-off intensified after growth in China’s manufacturing sector in February slowed to the weakest in the last 18 months. It is to be seen how much of this is because of the extended Lunar New Year holidays, and whether tougher pollution rules have significantly impacted production.
Services PMI has also slowed. However, most analysts are cautious about drawing inferences due to the long holiday, and one ought to wait till March’s numbers come out, to get a clearer picture of the Chinese economy.
Fed funds rate futures have now priced in a 1/3rd possibility of a third rate hike this year. Most other central banks are expected to mimic the US in tightening policy, and raise borrowing costs, thus hurting corporate earnings. 10 year US Treasury is trading well past 2.9%, dangerously near the psychological barrier of 3%. The comments also led to buying in the USD, which rallied against most major currencies, except the save haven Japanese yen.
Gold is still trading near three week lows, however, the outlook is positive given that higher volatility is expected in equity markets in the coming days. Oil continued declines, on concerns of increasing stockpile in the US.
Upcoming Events:
- 12:00 AM GMT – (NZD) ANZ Business Confidence
- 01:00 AM GMT – (CNY) Manufacturing PMI
- 01:00 AM GMT – (CNY) Non-Manufacturing PMI
- 08:00 AM GMT – (CHF) KOF Economic Barometer
- 09:00 AM GMT – (CHF) Credit Suisse Economic Expectations
- 10:00 AM GMT – (EUR) CPI Flash Estimate y/y
- 10:00 AM GMT – (EUR) Core CPI Flash Estimate y/y
- 01:30 PM GMT – (CAD) RMPI m/m
- 01:30 PM GMT – (USD) Prelim GDP q/q
- 02:45 PM GMT – (USD) Chicago PMI
- 03:00 PM GMT – (USD) Pending Home Sales m/m
- 03:30 PM GMT – (USD) Crude Oil Inventories
- &more…
