Global Financial News 1-5 April 2024

In the first week of April 2024, global financial markets trod a path of cautious optimism amid ongoing challenges. Key economic data from various regions, including the U.S., U.K., Eurozone, Japan, and China, highlighted trends in job markets, inflation, and sectoral shifts, suggesting nuanced policy responses ahead. Particularly in the U.S., the robust job additions, evidenced by the Non-Farm Payroll report and stable inflation rates, point to a resilient economy and may lead the Federal Reserve to reconsider anticipated rate cuts. This scenario posits a backdrop where elevated interest rates, aiming to temper economic growth, might dampen investment enthusiasm and exert a cooling effect on the broader economy.

Meanwhile, the stock market is poised to reflect these dynamics, potentially leading to restrained activity and affecting corporate profitability due to higher operational costs. The recent job data primarily inform this projection, yet it is crucial to remember that these insights are derived from a single day’s trading. The markets are thus expected to remain vigilant, keenly awaiting further economic indicators due in the coming week. Concurrently, in the sectors of A.I. and E.V., significant strides are shaping a competitive and innovative future landscape.

United States:

• Stubborn inflation at 2.5% in February and robust manufacturing activity influenced bond markets and expectations for Federal Reserve rate cuts.

• Fed’s Powell emphasized the unfinished task of inflation control, implying cautious rate cut approaches.

• A telephone conversation between President Biden and Xi Jinping covered multiple topics, including A.I. and military cooperation.

• The unemployment rate stabilized at 3.8% in March, with 303,000 jobs added.

• The Fed’s cautious stance on interest rate cuts continued, influenced by robust economic data.

United Kingdom:

• Net mortgage approvals surged to their highest in 17 months due to falling borrowing costs, signalling robust housing market activity.

• Manufacturing PMI improved, reflecting better domestic demand

. Real GDP per head fell by 0.6% in Q4 2023.

• Inflation eased to 3.4% in February 2024.

• The U.K. economy faced challenges in growth and productivity.

Eurozone:

• German unemployment showed resilience, indicating potential support for economic recovery later in the year.

• A decline in French inflation to 2.4% in March suggested a slowdown in price growth, influencing European Central Bank (ECB) rate-cut considerations.

. Anticipated GDP growth of 0.8% for 2024.

• Inflation is expected to average 2.9% in 2024.

• ECB may start reducing policy rates from mid-2024.

Japan:

• Services PMI indicated optimism among firms despite mixed confidence among manufacturers.

• There was speculation about the Bank of Japan potentially raising interest rates after a historic shift away from its massive stimulus program.

. GDP growth is projected at 1.2% for FY2024.

China:

• Manufacturing PMI climbed, signalling positive economic signs amid the property market slowdown and weak investor confidence.

• Hong Kong’s container output experienced a significant decline.

Canada:

• GDP growth is expected to be around 1% in 2024.

• Inflation averaged 3.8% in 2023.

Switzerland:

• GDP growth of 0.8% in 2023, projected to be 1.8% in 2024.

• Low unemployment rate of 1.9%.

Australia:

• Economic growth is forecasted at around 1.3% for 2024.

• CPI rose by 3.4% in the 12 months to January 2024.

New Zealand:

• Anticipated GDP growth slowing to 0.4% in the year ending March 2024.

Artificial Intelligence (A.I.):

• Discussions around A.I. safety and risk assessment between the U.S. and U.K. governments.

• Google contemplated charging for AI-powered premium features.

Electric Vehicles (E.V.):

• China’s Xiaomi announced its foray into E.V.s, highlighting increased competition in the sector.