28 Feb

Britain and the EU are on the verge of a Brexit deal on Northern Ireland. The New BoJ gov knows when to tighten monetary policy

February 28, 2023

By JustMarkets

The latest economic data showed that durable goods orders fell by 4.5%, more than the expected 3.7%. This data has somewhat lessened the nervousness about the impending interest rate hike. As the stock market closed on Monday, the Dow Jones Index (US30) increased by 0.22%, while the S&P 500 Index (US500) added 0.31%. The NASDAQ Technology Index (US100) gained 0.63%.

The January euphoria based on expectations that major economies will avoid recession this year has given way to something close to realism about the prospects for interest rates to rise more and stay high longer than many had previously expected. Economists at Barclays (BARC) and NatWest believe the Fed may increase the pace of interest rate hikes in March by 0.5%. At the same time, Morgan Stanley (MS) said it expects a slower pace of hikes of 25 basis points at each of the next three meetings. Fed funds futures show that traders expect rates to peak at 5.4% by September.

Tesla (TSLA) led growth in the consumer products segment yesterday. Analysts expect the company to unveil a master plan and a new long-term growth strategy, particularly its 3rd generation automotive platform.

Pharmaceutical company Pfizer (PFE) is in preliminary talks to acquire cancer drugmaker Seagen (SGEN).

Stock markets in Europe were mostly up on Monday. German DAX (DE30) gained 1.13%, French CAC 40 (FR40) added 1.51%, Spanish IBEX 35 (ES35) gained 1.23%, and British FTSE 100 (UK100) closed up by 0.72% yesterday.

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Britain and the EU are on the verge of a Brexit deal on Northern Ireland. Key politicians in Northern Ireland have set the bar high for a deal. Parts of the new UK government remain permeated by the Brexit controversy that has paralyzed British politics after the country’s vote to leave the EU in 2016. As part of its withdrawal agreement, Britain signed an agreement with Brussels known as the Northern Ireland Protocol to avoid imposing politically contentious checks along the 500-kilometer (310-mile) land border with EU member Ireland. But the protocol effectively created a border for some goods moving from Britain because it left Northern Ireland in the EU’s single market for goods.

Russia has suspended oil shipments to Poland through the “Druzhba” pipeline, Polish oil refiner PKN Orlen said Saturday. Earlier this month, Russia announced plans to cut oil exports from its western ports by 25% in March compared with last month, exceeding a previously discussed production cut of 5%. Nevertheless, most analysts believe the European Union’s ban on Russian oil imports by sea and international price caps will have only a marginal effect on overall global supplies.

Asian markets were mostly down yesterday. Japan’s Nikkei 225 (JP225) decreased by 0.11% for the day, China’s FTSE China A50 (CHA50) was down by 0.12%, Hong Kong’s Hang Seng (HK50) fell by 0.33%, India’s NIFTY 50 (IND50) lost 0.41%, and Australia’s S&P/ASX 200 (AU200) was down by 1.12%.

According to a Bloomberg survey, about 70% of economists forecast a tightening by the Central Bank of Japan by July, with 26% expecting such a move at Ueda’s first meeting in April and June, respectively. Some have warned of the risk that the bank could change its yield curve control program in March before Kuroda leaves office to give Ueda more time. Incoming Bank of Japan (BOJ) Governor Kazuo Ueda said Monday that he had ideas about how the central bank could abandon its massive stimulus but that the shift to tighter policy would only happen when the country’s trend inflation picks up significantly.

S&P 500 (F) (US500) 3,982.24 +12.20 (+0.31%)

Dow Jones (US30)32,889.09 +72.17 (+0.22%)

DAX (DE40) 15,381.43 +171.69 (+1.13%)

FTSE 100 (UK100) 7,935.11 +56.45 (+0.72%)

USD Index 104.65 -0.56 (+0.63%)

Important events for today:
  • – Japan Retail Sales (m/m) at 01:50 (GMT+2);
  • – Japan Industrial Production (m/m) at 01:50 (GMT+2);
  • – Australia Retail Sales (m/m) at 02:30 (GMT+2);
  • – Japan BOJ Gov-Designate Ueda Speaks at 06:10 (GMT+2);
  • – Switzerland KOF Leading Indicators (m/m) at 10:00 (GMT+2);
  • – Switzerland GDP (q/q) at 10:00 (GMT+2);
  • – Indian GDP (q/q) at 14:00 (GMT+2);
  • – Canada GDP (q/q) at 15:30 (GMT+2);
  • – US Richmond Manufacturing Index (m/m) at 17:00 (GMT+2);
  • – US CB Consumer Confidence (m/m) at 17:00 (GMT+2).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.


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