Ā© Reuters
By Geoffrey Smith
Investing.com – The US and China negotiate barbs at their first face-to-face meeting of the year. The Bank of Japan begins to reduce its hyperaggressive monetary stimulus, while Russia becomes the third major emerging economy to raise interest rates this week. The EU’s new Covid-19 wave is growing, while Paris is back on the block, while Nike (NYSE š becomes the latest company to be hit by supply chain problems. Here’s what you need to know about the financial markets on Friday, March 19th.
1. US-China negotiations start off badly
The first direct talks between the U.S. and China since President Joe Biden took office started badly in Alaska, with Chinese delegates criticizing the US for everything from institutional 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 in relation to Hong Kong and Taiwan, and its treatment of Muslim Uighurs in its Xinjiang province. One of the first actions of the Biden government was to accuse China of genocide in Xinjiang.
The bad tone of the trading contributed – but was not the only factor – to another sharp drop in Chinese equity markets on Friday, with the index losing more than 3% and the indexes and both losing 2.8%.
2. Bank of Japan moves away from stimulus, while Russia increases
What is losing faith in its decades-long efforts to avoid deflation with asset purchases. The central bank abandoned its promise to buy shares worth 60 trillion yen this year, saying it would adopt other policies to ensure that the bank’s profitability is not badly hampered by its negative interest rate policy.
The BoJ also said it would allow long-term bond yields to fluctuate by 25 basis points, having previously guided the market to assume a range of 20 basis points. This was interpreted as a modest tightening of the policy, although the governor played down these suggestions.
As such, the BoJ was the only advanced economy central bank to change its stance in a busy week for monetary policy meetings. In contrast, it became the third major emerging central bank to produce a big surprise this week (after Brazil and Turkey), raising its base rate by 25 basis points to 4.50%.
3. Actions defined to skip the opening; Nike hit by supply chain problems
US stock markets are expected to open slightly higher later, but only the cyclically-weighted Dow Jones is on track to end the week in positive territory after Thursday’s fall.
At 6:30 am ET (1030 GMT), the contract was up 24 points, or 0.1%, while the contract was up 0.2% and the contract was up 0.5%.
The market is gearing up for an increase in volatility before maturity at the end of March, futures and options contracts on the various indices and individual stocks.
Also in focus later will be Nike, which started to affect its business, after three months until February. He blamed the global shortage of containers and congestion at US ports. Nike (NYSE š shares fell 2.8% in pre-market trading.
4. Covid-19 cases in Europe increase again as the EU suspends the suspension of the AstraZeneca vaccine (NASDAQ š
France placed eight of its regions – including those around Paris and Nice – in a one-month period, while Germany recorded its worst day for new Covid-19 infections since January. Infection curves are also continuing to increase alarmingly in Poland and Hungary, which are home to factories that are essential parts of the supply chain of the German manufacturing sector.
The development comes at a time when European governments change their minds, resuming its distribution after the European Medicines Agency again emphasizes that it considers the vaccine safe and effective.
The United States, for its part, has said it will export 4 million doses of the AstraZeneca vaccine currently stored but not released for use in the United States. However, they will not go to Europe, but to.
5. Oil recovers after falling on Thursday due to fears of demand
Oil prices rebounded overnight, after the worst drop in a day in months, caused by financial players finally making profits on a month-on-month high that had already looked tired for a week.
The new wave of Covid-19 cases that hit Europe and parts of India seems to have dampened optimism about the demand path for the rest of the year, with the summer tourism season in Europe in particular risking a delayed reopening. – with all that this implies for jet fuel and gasoline demand.
At 6:30 am ET (1030 GMT), futures were up 1.6% at $ 60.98 a barrel, while crude oil was up 1.0% at $ 63.91 a barrel. Baker Hughes and positioning data ends the following week.