Global equity markets ended weaker last week, amid rising fears of a potential global trade war, after the US President, Donald Trump, announced import tariffs on China. UK markets ended the week in red, as the British Pound strengthened, after UK and the European Union agreed on a post-Brexit transition and led by losses in commodity and consumer sector stocks. On the data front, UK’s ILO unemployment rate registered a fall in the November-January 2018 period, marking its lowest level since 1975. Additionally, average weekly earnings advanced more than market expectations on an annual basis in the same period, recording its fastest growth since September 2015. Moreover, the nation’s public sector borrowing fell more than market forecast in February. European markets ended the week on a negative footing, weighed down by losses in banking and technology sector stocks. Data revealed that, Eurozone’s Markit manufacturing PMI fell more-than-anticipated in March, reaching to its lowest level in eight months. Additionally, Markit services PMI fell to a five-month low in March. Separately, Germany’s Markit manufacturing PMI dropped more than market expectations in March, recording its lowest growth since July 2017. Further, Markit services PMI recorded a more-than-anticipated decline in the same month. US markets closed lower last week, amid growing trade tensions between US and China and after the Federal Reserve (Fed) increased its benchmark interest rates and upgraded its 2019 rate-hike forecast. On the macro front, the US initial jobless claims unexpectedly rose for the week ended 17 March 2018. Additionally, the flash durable goods orders rose more than expected in February. Furthermore, the nation’s Markit services PMI unexpectedly fell in March. On the contrary, the US Markit manufacturing PMI rose more than market forecast in March. Asian markets ended mostly firmer last week, extending their gains for the second consecutive week.


Currency Update


The British Pound ended stronger against the greenback, following the announcement that UK and the European Union agreed a 21-month Brexit transition deal.
The US Dollar ended weaker against its major counterparts last week, amid growing fears over a potential trade war.



US Fed raises key interest rates and upgrades GDP forecast


The Federal Reserve’s (Fed) officials voted unanimously to lift the benchmark interest rate by a quarter percentage point to a range of 1.50% to 1.75%, citing an improving economic outlook. Further, Fed’s Chairman, Jerome Powell, indicated that the US economy has strengthened in recent months and inflation appears to be moving towards the central bank’s 2.00% goal. In its quarterly economic outlook, the central bank stuck to its prior forecast of three rate hikes in 2018 but upgraded its 2018 economic growth projection from 2.50% to 2.70%, while growth forecast for 2019 was raised to 2.40%, from 2.10% estimated earlier in December. However, inflation estimate was left steady at 1.90% for this year.



The Week Ahead


Going ahead this week, investors will watch Eurozone’s economic confidence index, business climate indicator, consumer confidence index along with Germany’s GfK consumer confidence index, unemployment rate and consumer prices for further direction. Moreover, the US gross domestic product, consumer confidence index, MBA mortgage applications and Michigan consumer sentiment index along with the UK’s mortgage loans, Nationwide house price index, GfK consumer confidence index and net consumer credit will be on investors radar.



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