Weekly Market Review - March 18-22
The week ending March 22 was challenging for the British pound, as it fell against its rivals on the news that the EU leaders allowed the UK to delay Article 50, which suggests a postponement of Brexit beyond March 29. GPB fell 0.56% against the US dollar and 0.48% against the euro. The markets are still weighing the risks of the US-China trade disputes while many economies in Asia and Europe are showing poor performance.
UK Inflation Points up
The UK’s inflation rate increased in February, but the growth is still among the lowest in two years. Thus, CPI rose last month by 1.9% compared to the same period in 2018, which is higher than analysts’ forecast at 1.8%. Core CPI, which excludes the prices of food and energy, decreased. Given that prices in London lowered by 1.6%, February is the eleventh month in a row when prices in the capital city don’t go up.
Australia’s Jobless Rate Falls
Last month, the unemployment rate in Australia fell to the lowest level in nearly 8 years, which pushed the local currency higher against its rival on hopes that the central bank will leave the interest rates at the same level. On Thursday, the Australian Bureau of Statistics (ABS) said that 4,600 new jobs were created last month, with the part-time work being the main driver.
BoE Left Rates Unchanged
The Bank of England didn’t touch the interest rate, which was in line with analysts’ expectations. The bank’s committee voted unanimously against any modification in the monetary policy ahead of the Brexit vote. Interestingly, the central bank’s hesitation in raising the rates comes amid positive fundamental data proving a strengthening of the UK economy. However, everything might change when the Brexit story has its last word.
US Jobless Claims Decline
The number of US citizens who applied for unemployment benefits fell last week more than anticipated, suggesting that the situation in the labor market is not that bad despite the decline in new jobs recorded last month. On Thursday, the US Department of Labor revealed that initial jobless claims fell last week by 9,000 to 221,000, against the expected drop to 226,000.
German Manufacturing Falls For a Third Straight Month
German purchasing managers’ index (PMI) in the manufacturing sector has another difficult month on concerns on trade disputes with China and the US at the forefront, falling to 44.7. IHN Markit’s flash composite PMI, which includes the manufacturing and services sectors, declined to 51.5 – the lowest level since 2013. The fall was caused by the worst performance in manufacturing since 2012.
German Economic Advisers Are More Pessimistic
A group of economic advisers to the German government cut its GDP growth outlook for 2019 to 0.8% on current risks revolving around the Brexit, trade conflict between the US and China, and slower economic growth in China. Last November, the experts forecast that the local economy would grow by 1.5% this year. The German economy was slowed by poor performance in the auto and chemical sectors.
Upcoming News to Watch
During the next week, several important events and economic indicators might move the markets. On Monday, Britain will have to vote on the Brexit deal again. The UK will continue on Friday with a series of indicators, including the GDP growth for the fourth quarter, business investment, and mortgage lending.
The US will report on its building permits and housing starts on Tuesday and will publish the CB consumer confidence index later in the day. On Wednesday, the largest economy in the world will report on its important, exports, and trade balance. The country will release its GDP growth figures for the fourth quarter on Thursday.
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