Global equity markets ended mostly higher last week. UK markets ended lower for the week, following disappointing corporate earnings. On the data front, UK’s gross domestic product (GDP) advanced at a slower than expected pace on a quarterly basis in 4Q17, raising concerns over the nation’s economic outlook. European markets ended the week higher, supported by robust corporate earnings. On the macro front, Eurozone’s current account surplus narrowed to a six-month low in December. Moreover, the region’s preliminary consumer confidence index dropped more than market expectations in February. On the contrary, the final consumer price index (CPI) slowed in January, raising concerns that subdued inflationary pressures could likely delay the timing of the next interest rate hike. Separately, Germany’s economic sentiment index dropped in February and the preliminary manufacturing PMI declined in the same month. US markets ended mixed during the week, as upbeat economic reports were offset by concerns over rise in interest rates. On the economic front, US initial jobless claims unexpectedly dropped for the week ended 16 February 2018. The nation’s manufacturing PMI surprised with a rise in February. Asian markets closed higher last week, extending their previous week gains.


Currency Update


The EUR ended lower against the USD, amid dismal economic reports. Data showed that Eurozone’s consumer confidence index dropped more-than-expected in February, recording its first decline in seven months. Additionally, the region’s economic sentiment index dropped in the same month. Moreover, the nation’s current account surplus narrowed to a six-month low in December. Also, the Markit manufacturing and services PMI eased more than market forecast in February. Further, the nation’s annual inflation slowed in January. The GBP ended weaker against the USD, after UK’s ILO unemployment rate advanced for the first time in nearly two years in the October-December 2017 period. Meanwhile, the Brexit cabinet committee agreed on a proposal for post-Brexit trade with the European Union. The US Dollar ended higher against its major counterparts last week, following the release of upbeat FOMC minutes and rise in US treasury yields.



FOMC Minutes: An upbeat assessment of the US economy.


According to the Fed’s monetary policy meeting minutes in January, the officials offered a positive outlook on the US economy and were increasingly optimistic on reaching their 2.0% inflation target over the medium term. Further, the policymakers upgraded their economic growth forecasts and pointed to the recent tax cuts as well as the improved global economic outlook as factors contributing to the US economic growth this year.



The Week Ahead


Going ahead this week, investors will keep a close watch on Eurozone and Germany’s CPI, UK’s Gfk consumer confidence index, Markit manufacturing PMI along with the US GDP, durable goods orders and consumer confidence index for further indication.



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