Weekly Market Review - April 8-12
This week has been strong for euro, as the European Central Bank didn’t show any signs of policy tightening, keeping the interest rates unchanged. The European currency rose 0.89% against the USD and 0.43% against the British pound. The Japanese Yen was among the worst performers, losing over 1% against the euro and Australian dollar.
The world’s biggest economies published mixed economic results, maintaining the uncertainty around the global economic growth. Here are the most important updates released this week:
China’s CPI Shows Biggest Growth in a Year
China’s consumer prices index (CPI) increased 2.3% last month in annual terms, up from February’s 1.5%, which is the biggest surge in over 12 months. The jump in inflation was led by increasing prices of vegetable and pork, which accounted for about 0.5% of the CPI growth, the National Bureau of Statistics said on Friday. The growth of core CPI, which doesn’t include the prices of food and energy, was unchanged at 1.8%. A rebound in factory inflation might point to the start of an economic recovery.
US Inflation Increases Above Expectations
The US inflation rose 0.4% last month, up from February’s growth by 0.2%. This is the highest growth in 14 months, but the general trend of the CPI still points to slowing economic growth. The CPI increase was driven by higher prices of rents, food, and gasoline. In annual terms, the inflation rose 1.9% in March, after a 1.5% increase in February – the smallest rise since September 2016. Both the monthly and annual CPI readings are up 0.1% than analysts’ expectations. Core CPI added 2.0% year on year.
Italy Cuts GDP Growth Forecast
On Tuesday, Italy reduced its economic growth forecasts for 2019 and 2020 while raising the budget deficit and public debt, noting the issues encountered by the ruling coalition labelled as populist. Thus, the government anticipates that the country’s GDP will add only 0.2% this year, way below its previous forecast at 1.0%. The slowdown in GDP growth affects public finances, which why the Treasury increased the budget deficit target to 2.4% of GDP from 2.04%, even though the new target is not welcomed by the European Commission.
China’s Exports Surge While Imports Disappoint
China’s exports increased in March while imports fell for the fourth month in a row, demonstrating a mixed image of the second largest economy in the world amid trade tensions with the US. Last month, exports jumped 14.2% compared to the same period of 2018, which is the strongest expansion in five months and above analysts’ expectations at 7.3%. However, domestic demand keeps weak, with imports falling 7.6% in annual terms, below economists’ forecasts at -1.3%.
Economists Pessimistic Over Japan’s Exports and CPI Performance
Japan’s exports probably decreased for a fourth straight month in March, according to economists surveyed by Reuters. Market participants are worried that the external demand might hit Japan’s economic recovery. Exports are expected to have decreased by 2.7% in March in annual terms while imports might have added 2.6%. The Reuters’ poll also showed that the country CPI might have decreased as well in March, which could put additional pressure on the Bank of Japan to meet its inflation target at 2%.
US Consumer Sentiment Weakens
US consumer sentiment index fell this month for the first time since January 2019, given that the long-term GDP growth forecast was reduced to the lowest level in over a year while enthusiasm over reduced tax faded. The preliminary consumer sentiment, prepared by the University of Michigan, declined to 96.9 from 98.4 in March. Analysts surveyed by Bloomberg expected a decrease to only 98.2.
Upcoming News to Watch
Next week, the Brexit talks will still be in the spotlight, while the UK will release several macroeconomic indicators, such as consumer price index data, production prices index, and house price index, all of which will be released on Wednesday.
On Tuesday, China will publish its GDP growth data in quarterly and annual terms. Besides, it will report on retail sales, unemployment, and industrial production.
On Friday, almost all of the major markets will be closed due to the Good Friday holiday.
Anatol has been writing for our news site for a year and is the newest member of our team. While he’s new to us, he’s certainly not new to trading with over 10 years’ experience being a professional financial journalist and working in the markets.