Economic Summary: 4th March - 9th March 2024

The highlight of the week was the Non Farm Payroll. The substantial numbers in February 2024, where 275,000 jobs were added, exceeding the expected 200,000, suggest a robust U.S. economy. This strength in the job market is influencing expectations around Federal Reserve policy, particularly regarding interest rate cuts. The impressive job growth, alongside higher wages, may lead the Fed to delay any potential rate cuts. For the stock market, this could mean less upward movement in the short term, as the anticipation of higher interest rates can temper investor enthusiasm.

Last week witnessed pivotal economic developments across major global economies. In the US, upgraded GDP forecasts and labour market resilience signal economic strength while the Fed contemplates interest rate cuts. Europe shows mixed inflation trends and policy shifts, while Japan faces monetary policy changes amid economic indicators. China targets ambitious growth amidst AI sector support, and Australia grapples with GDP growth challenges. Switzerland's inflation rise could influence monetary decisions. AI advancements and ESG initiatives continue to reshape economic and environmental landscapes.

United States (USD):

1. Economic Growth and Jobs:

- GDP forecasts upgraded to 2% in 2024 due to robust growth in Q4 2023 and a resilient labour market.

- Non-farm payrolls increased by 275,000 in February, with an unexpected rise in the unemployment rate to 3.9%.

- Personal consumption expenditures rose by 2.4% in January.

2. Federal Reserve and Interest Rates:

- Jerome Powell signalled that the Fed is close to having the confidence to cut interest rates, which will likely happen in the coming months.

3. Political Developments:

- Trump won the majority of the Republican primaries on Super Tuesday and is likely to face Biden in the presidential race.

Europe (EUR):

1. Economic Performance and Inflation:

- ECB maintained rates at 4% but lowered its 2024 inflation forecast from 2.7% to 2.3%.

- Germany and France reported decreased inflation, while Spain saw mixed trends.

- Germany's economy is expected to grow only by 0.2% in 2024.

2. Policy and Regulation:

- The European Commission is considering a UK-style immigration plan to handle asylum seekers outside the EU.

Japan (JPY):

1. Economic Indicators:

- Capital expenditure rose by 8% QoQ in Q4 2023.

- Inflation rose to 2% in February, aligning with the BOJ's target.

- Household spending dropped by 6.3% YoY in January, the most significant decline in nearly three years.

2. Monetary Policy:

- Increasing speculation about the BOJ raising interest rates in March after a decade of ultra-loose monetary policy.

China (CNY):

1. Economic Targets:

- Aiming for about 5% economic growth in 2024, an ambitious target given the ongoing challenges.

- Consumer prices rose for the first time since August, up 0.7% in February.

2. AI Developments:

- China is taking steps to support AI startups facing rising data center costs due to US chip restrictions.

Australia (AUD):

1. GDP Growth:

- GDP grew by 0.2% in Q4 2023, reflecting pressure from high interest rates and rising living costs.

- The Reserve Bank of Australia is expected to start an easing cycle in 2024, with forecasts for a rate cut in the third quarter.

Switzerland (CHF):

1. Inflation:

- Inflation increased to 1.2% YoY in February, potentially influencing the Swiss National Bank's interest rate decisions.

Global Developments in AI and ESG:

1. AI Sector:

- Nvidia's market value exceeded $2 trillion, driven by AI enthusiasm.

- Microsoft and OpenAI are expanding their AI involvement beyond ChatGPT, with Microsoft investing in French AI startups.

2. ESG Initiatives:

- The EU agreed on rules to reduce packaging waste, although failing to ban certain disposable items.

- OPEC+ members extended oil production cuts to support crude prices.