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BOV Market Watch - Week Ending 30 March 2017
03 Apr 2017
Eurozone private sector activity expands by the most in nearly six years. The composite purchasing managers’ index (PMI) reading of private sector activity in the Eurozone compiled by IHS Markit surged to 56.7 in March. That is the fastest pace in just under six years and higher than the February reading of 56.0. The reading for the services sector also surprised, rising a full point to 56.5, a 71-month high. The manufacturing sector reading, however, slipped to a two-month low of 57.2. Collectively, the data suggest a first quarter gross domestic product growth rate of around 0.6%, IHS Markit said. The survey also showed the best employment growth for almost a decade as both manufacturing and service sector firms responded to surging order books.

UK invokes Article 50. British Prime Minister Theresa May signed the historic letter triggering her country’s divorce from the European Union last Tuesday. The letter was hand-delivered to the President of the European Council Donald Tusk in Brussels on the following day. Negotiations will now start on the details of the Brexit process set to last until 2019. Ms May vowed to restore 'self-determination' for the UK as she updated MPs in parliament. The letter warns the EU that it would be a 'costly mistake' should it try to punish the UK in the Brexit negotiations.

German business confidence strongest since mid-2011. According to the Institute for Economic Research (Ifo) confidence among German businesses exceeded expectation in March, rising to its highest level since July 2011. Ifo’s overall business climate index rose to 112.3 from last month’s 111.6. The rise in the headline figure was driven by improved sentiment in the manufacturing, construction and retailing sectors, while the business climate in wholesaling deteriorated. Analysts had expected the index to drop slightly. The strong results support the scenario presented by last week’s PMI surveys, which suggested that the Eurozone’s largest economy was at its strongest for the past six years. Ifo chief Clemens Fuest said in a statement that the upwards trend in assessments of the current business situation continued unabated and the business outlook also improved.

US consumer confidence soars to highest level since December 2000. Consumer confidence in the US unexpectedly improved in March, according to a report by the Conference Board. The Conference Board said that its consumer confidence index leaped to 125.6 in March from a revised 116.1 in February. The increase surprised economists, who had predicted the index to decline to 113.8 from the 114.8 originally reported for the previous month. With the unexpected increase, the consumer confidence index climbed to its highest level since reaching 128.6 in December of 2000. The survey also found that those saying that business conditions are "good" rose to 32.2 percent from 28.2 percent while those opining that business conditions are "bad" fell to 12.9 percent from 13.4 percent.

President Trump suffers first major set-back. U.S. President Donald Trump gave up on what he promised would be his most important legislative priority: fixing the American health care system. Mr Trump declared that the existing health care legislation (known as “Obamacare” after Mr Trump’s predecessor, Barak Obama) would remain because he was unable to get his own party to agree on a sweeping reform bill. Although the legislation was largely authored by House Speaker Paul Ryan, representatives from the right wing of MrTrump’s own Republican Party vigorously opposed the bill. However, Mr Trump blamed the Democrats for the failure. The political consequences of this stunning debacle may end up being historic as well as crippling.

China tightens rules to cool Beijing's property market. In the latest step by the Chinese authorities to cool the real estate market, regulators have introduced rules to curb the purchase of new commercial property in Beijing by individuals. New commercial plots can now only be sold to enterprises, public entities and social organizations, according to a statement issued by Beijing's banking, industry and commerce, housing and urban planning authorities. China has been trying to suppress home prices over the past year or so, imposing measures such as higher mortgage down payments to prevent bubbles as the nation's ballooning debt raised the risk of a property market crash. Data showed China's property sales surged in the first two months of the year despite repeated attempts to dampen it.

Turkey may hold a second referendum on whether to continue with European Union accession talks, following a planned vote on April 16 that could give President Erdogan sweeping new powers. The news comes a day after Mr Erdogan vowed to review all political and administrative ties with the EU, including a deal to curb illegal migration, but maintain economic relations with the bloc.
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