Global equity markets ended firmer last week, as concerns surrounding global trade war eased, as the US and China expressed interest in holding discussions. UK markets ended the week in positive territory, supported by gains in utility and mining sector stocks. On the data front, UK’s GfK consumer confidence index surprisingly improved in March. Additionally, current account deficit unexpectedly narrowed in the fourth quarter. Moreover, net consumer credit climbed more than market expectations in February. Separately, the nation’s economy expanded in line with market expectations in 4Q17. European markets ended the week on a positive footing, boosted by gains in consumer staples and healthcare sector stocks. On the macro front, Euro-zone’s consumer confidence index held steady in March. Separartely, German GfK consumer confidence index surprisingly rose in April. Additionally, the nation’s unemployment rate dropped to a new record low in March. However, German consumer price index (CPI) rose less than expected on an annual basis in March. US markets ended the week in positive territory. In economic news, US annualised gross domestic product (GDP) surpassed market expectations on a quarterly basis in 4Q17, while the nation’s seasonally adjusted initial jobless claims unexpectedly fell, hitting its lowest level since January 1973. Further, the MBA mortgage applications rebounded last week. On the other hand, the US consumer confidence index declined in March. Further, the Dallas Fed manufacturing index recorded a higher than expected drop in March. Asian markets ended mostly higher last week, amid easing tensions over a potential trade war.


Currency Update


The EUR ended lower against the USD, after Eurozone’s economic sentiment indicator fell more than market forecasts, reaching its lowest level in six months. The British Pound ended weaker against the greenback, after a new report from the Bank of England painted a gloomy picture for the outlook of the UK’s retail sector. The US Dollar ended stronger against its major counterparts last week, after the US annualised GDP came in better than expected in the fourth quarter.



The US and China trade war jitters


The US President, Donald Trump, increased tensions in the market last week by imposing tariffs on about $60 billion worth of Chinese goods, just weeks after announcing of sanctions on steel and aluminium imports, temporarily exempting Canada and Mexico. In retaliation to the US duties on imports of aluminium and steel, China increased tariffs by up to 25% on 128 US products, escalating the dispute between the world’s largest economies.



The Week Ahead


Going ahead this week, market participants will keep a tab on Eurozone, German, UK and the US manufacturing and services PMI along with Eurozone’s CPI, unemployment rate and retail sales for further cues. Moreover, the US ISM manufacturing index, durable goods orders and trade balance along with non-farm payrolls, unemployment rate and average hourly earnings will garner significant market attention.



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