Global equity markets ended weaker last week, amid rising fears of a potential global trade war. UK markets ended the week on a negative footing, weighed down by losses in commodity and consumer sector stocks. European markets ended the week lower, led by losses in banking and technology sector stocks. On the data front, Euro-zone’s consumer price index (CPI) slowed more than initially expected on an annual basis in February. Additionally, the region’s industrial production fell more than anticipated on a monthly basis in January. US markets ended the week in the red, following the ouster of the Secretary of State, Rex Tillerson by the US President, Donald Trump, amid rifts over foreign policy. On the data front, US retail sales unexpectedly dropped on a monthly basis in February. On the flipside, the nation’s producer price index and CPI rose in line with market expectations in February, thereby boosting prospects of a gradual interest rate hike in 2018. Also, the nation’s industrial production jumped higher than market forecast on a monthly basis in February, notching its highest level in four months. Further, the US Michigan consumer sentiment index unexpectedly surged in March, reaching its highest level in fourteen years. Asian markets closed mostly higher last week, extending their gains for the second consecutive week.


Currency Update


The EUR ended lower against the USD, after final reading of the Eurozone’s annual consumer price inflation slowed more than initially anticipated in February. The British Pound ended stronger against the greenback, after the UK Chancellor of the Exchequer, Philip Hammond, raised UK’s growth projections over the coming years. The US Dollar traded mostly weaker against its major counterparts last week, amid growing concerns over global trade worries and US political turmoil.



Spring Statement: Upgraded projections for UK’s growth and fall in inflation and borrowing


UK Chancellor of the Exchequer, Philip Hammond, in his first Spring Statement, raised Britain’s growth projections and predicted a decline in government borrowing as well as national debt over the coming years. Hammond indicated that the Office for Budget Responsibility has upgraded UK’s economic growth forecast to 1.5% for 2018, from an earlier expectation of 1.4%. However, growth outlook for 2021 and 2022 were revised lower to 1.4% and 1.5%, respectively. Further, the Chancellor stated that British inflation should fall back to the central bank’s 2.0% target over the next 12 months, while forecasting that public spending could rise in 2018’s Autumn Budget.



The Week Ahead


Going ahead this week, investors will keep a watch on the Bank of England’s rate decision, UK’s CPI and public sector net borrowings along with the Eurozone’s trade balance, consumer confidence index and Markit services PMI for further direction. Furthermore, the German Ifo indices, Markit manufacturing and services PMI along with Japan’s national CPI, all industry activity index and Nikkei manufacturing PMI will be on investors’ radar.



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