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BOV Market Watch - Week Ending 13 April 2017
13 Apr 2017
US jobs growth falls sharply in March. According to a report published by the Labour Department, unemployment in the US increased by less than expected in March. The report revealed that the US economy added only 98,000 new jobs in March following a rise of a revised 219,000 jobs in February. Jobs growth averaged 178,000 per month in the first quarter, less than the 187,000 monthly average increase last year. Analysts had predicted a rise of 180,000 jobs in March compared to the increase of 235,000 jobs initially reported in the prior month. Notwithstanding the weaker than expected jobs growth, the unemployment rate declined from 4.7 percent in February to 4.5 in March, though it had been expected to remain unchanged. The unemployment rate fell to its lowest level in almost a decade when it hit 4.4 percent in May 2007.

UK inflation holds steady at near four-year high. British inflation stood at 2.3 percent in annual terms in the month of March, unchanged from the near four-year high seen in February. This March reading met analyst expectations with the month-on-month figure dropping from 0.7 percent to 0.4 percent. Rising prices for food, alcohol and tobacco, clothing and footwear, miscellaneous goods and services were the main drivers behind the surge in consumer prices, which is above the Bank of England's target of two percent, for the second consecutive month. The U.K.'s Office for National Statistics noted that this is the highest consumer price increase seen since the end of 2013. However, analysts believe that prices could rise even further. This week’s data "represents just a temporary pause in an upward trend which will probably take inflation to just over three percent," Ruth Gregory, U.K. economist at Capital Economics, said in a note.

German confidence leaps in April. Confidence among German investors rose for a second month in a row during April, to its highest level in more than one-and-a-half years. This as the recent series of strong economic data boosted financial experts’ economic expectations. The economic sentiment indicator climbed to 19.5 from 12.8 in March, survey results from think tank ZEW showed. This was much better than the 14.8 economists had forecasted. Although the long-term average is yet to be beaten, these results are comparable to the expectations prior to the Brexit vote in June last year, the ZEW said. The current situation index rose to 80.1 from 77.3 in March. This reading is now at its highest level since July 2011. Economists had forecast a modest improvement to 77.5.
 
Fed Chair Yellen says economy is ‘doing pretty well’. Federal Reserve (Fed) Chair Janet Yellen said last Monday that the economy is growing and the Fed will work to keep it that way as it stabilises inflation. “We are doing pretty well” in terms of the Fed’s goals, Yellen said. “The economy is growing at a moderate pace.” Her message to an audience at the University of Michigan could be seen as hinting at further interest rate increases. The Fed last raised rates in March by a quarter-point. This was the second increase in three months. The Fed has to gradually raise interest rates toward what Ms Yellen called a “neutral stance” if the economy continues to perform in line with the central bank’s expectations.

China inflation rises slightly as producer price inflation moderates. Data released by the National Bureau of Statistics showed that China’s inflation increased from 0.8 percent in February to 0.9 percent in March. This was marginally lower than the anticipated one percent. The government’s inflation target for 2017, is around three percent. China’s producer price inflation (PPI) slowed for the first time in seven months in March as iron ore and coal prices plummeted, forced by concerns that Chinese steel production is outweighing demand and threatening a surplus of the metal later this year. On a monthly basis, producer price inflation fell by 0.3 percent from a 0.6 percent in February.

Australia’s Westpac consumer confidence declined in April. The latest survey by Westpac Bank showed that consumer confidence in Australia fell marginally in April by 0.7 percent to a score of 99.0 following a 0.1 percent in March to 99.7. The latest reading marked the fifth successive month when the index has been less than 100. A reading below 100 shows that pessimists exceeds optimists in their economic view. The Bank said that the reading signalled a possible softening in consumer spending. The survey also showed that confidence in the labour and housing markets deteriorated as well in April. Overall consumption trends remained mostly positive at the end of last year, with consumer expenditure growing steadily in the last quarter. Analysts believe that data shows mixed signals on Australia’s economic outlook.

Oil prices climb higher amid geopolitical concerns. The price of crude oil showed a notable upward move early this week amid concerns about geopolitical tensions. West Texas Intermediate for May delivery is currently trading at $53.10 a barrel (as at Thursday morning), reaching it best level in over a month. The increase in the price of crude oil came amid lingering geopolitical concerns after last week’s gains after the US missile strike on a Syrian airbase and another shutdown at Libya's largest oilfield. While Syria produces only small volumes of oil, the Middle East is home to more than a quarter of the world's oil output. 
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