Yazar: Geoffrey Smith
Investing.com – The US and China will hold their first face-to-face meeting of the year. Russia became the third largest emerging market economy to increase interest rates this week as the Bank of Japan (BoJ) began to reduce its hyper-aggressive monetary stimulus. As the new Covid-19 wave of the EU intensifies, Paris is on its way to quarantine. Last company damaged by supply chain problems Nike (NYSE 🙂 happened.
Here’s what you need to know in financial markets on Friday, March 19th.
US-China talks started badly
In the first face-to-face meeting between the US and China since President Joe Biden took office, Alaska had a bad start. Chinese delegates criticized the US for everything from corporate racism to trade tariffs and cyber espionage.
US Secretary of State Anthony Blinken responded by accusing China of undermining the rules-based world order with its actions against Hong Kong and Taiwan and its treatment of Muslim Uighurs in the state of Xinjiang. One of the first actions of the Biden administration was to accuse China of committing genocide in Xinjiang.
The weak tone of the talks – but that wasn’t the only factor – contributed to another big drop in Chinese stock markets on Friday. The A stock index lost more than 3%, while the CSI 300 and Chinext indices lost 2.8%.
2.Russia hike interest rates while the Bank of Japan moves away from the incentive
The Bank of Japan (BoJ) signaled that it has lost faith in its decades-long efforts to curb deflation through asset purchases. The central bank said it would abandon its commitment to buy 60 trillion yen worth of stocks this year and implement other policies to ensure that bank profitability does not suffer too much from the negative interest rate policy.
BoJ also said it would allow long-term bond yields to fluctuate by 25bps, which had previously guided the market for a 20bp band assumption. Director Haruhiko Kuroda took a stand against allegations of political tightening.
Thus, the BoJ became the only developed market that changed its stance in a busy week with monetary policy meetings. Otherwise, the Central Bank of Russia (after Brazil and Turkey) was 25 basis points increase in interest rates by removing 4,50’y% this week that a hawkish surprise third-largest bank in developing countries.
3.Stores will rise at opening, Nike grapples with supply chain issues
US stocks will open slightly higher, but after Thursday’s turmoil, it is only on the way to a positive end to the week of cyclists.
Up 24 points, it gained 0.2% and 0.5%.
The market is facing increased volatility before the day of March futures and options contracts in various indices and individual stocks expires.
Interest will also be on Nike. It was the last company to warn that the supply chain issue was impacting their business as they missed revenue expectations for the three months up to February. He blamed the global shortage of shipping containers and congestion in US ports.
4. Europe’s Covid-19 cases increase again, EU lifts AstraZeneca vaccine suspension
While strict quarantines came again for a month in eight regions in France, including Paris and Nice, Germany had the worst day since January in terms of the number of cases. Infection curves continue to increase at an alarming rate in Poland and Hungary as well. These countries are home to factories that are important parts of the supply chain in the German manufacturing industry.
European governments are on the verge of making a comeback on the AstraZeneca vaccine, after the European Medicines Agency emphasized again that it believes the vaccine is safe and effective.
On the other hand, the US said it would export 4 million doses of AstraZeneca vaccine, which is already stocked but not available in the US. However, it will be sent to Canada and Mexico, not to Europe.
5.Oil rebound after Thursday’s drop
Crude oil had experienced the worst one-day drop in prices in months, with financial players finally realizing profits after the rally that seemed exhausted for a week and lasted for months. Then he started to recover.
The new wave of viruses in parts of Europe and India seems to have dampened optimism about the demand trajectory for the remainder of the year. Europe’s summer tourism season, in particular, appears to be at risk with the delay in reopening.
While it was up 1.6% to $ 60.98, Brent rose 1.0% to $ 63.91. The week is coming to an end with Baker Hughes’ tower count and CFTC positioning data.