Moving markets today: Asia markets mixed; China holds firm loan prime rates, bitcoin and ether rally stalls; All eyes on UK Inflation and US Federal Reserve policy decision
Wall Street’s main indexes closed higher despite an initial dip in shares of prominent chipmaker Nvidia. Meanwhile, Asian markets showed hesitation amid concerns that the Fed might signal a slower pace of rate cuts. Tokyo’s Nikkei remained closed for a holiday. Bitcoin and ether experienced declines as investors took a break from the recent rally. Additionally, China’s central bank opted to keep its benchmark lending rates unchanged. XpertHR reported that UK employers have revised down their forecasts for pay deals to 4 per cent for the year. Investors were preparing for the Fed’s policy update, which includes a press conference by Chair Jerome Powell. UK inflation data is also on the horizon, ahead of the Bank of England’s policy decision. Here are five key takeaways for your day.
China keeps benchmark lending rates unchanged
China kept its key lending rates unchanged during the monthly fixing on Wednesday, which was expected by the market. This decision comes after the central bank maintained a stable policy rate the previous week, reflecting some signs of improvement in the broader economy. Both the one-year loan prime rate (LPR) and the five-year LPR remained steady at 3.45 per cent and 3.95 per cent respectively.
Despite the central bank’s efforts to stimulate growth and counter deflationary pressures, new bank lending in China saw a significant drop in February compared to the previous month’s record high. Chinese banks issued 1.45 trillion yuan in new yuan loans, falling short of economists’ predictions. The growth rate of outstanding yuan loans also hit a record low of 10.1 per cent compared to the previous year, below analysts’ expectations of 10.2 per cent.
Investors hit pause on rally: Bitcoin and ether prices fall
Bitcoin faced a notable decline of over 5.0 per cent, triggered by a widespread sell-off affecting cryptocurrencies and other volatile assets like stocks. Its price dropped to a two-week low of $62,766, while ether also saw a dip to a level not seen in over three weeks, hitting $3,147.5.
Despite this setback, Bitcoin has still shown a remarkable nearly 50 per cent increase since the beginning of the year, largely due to investors’ interest in U.S. exchange-traded funds supported by actual bitcoin.
UK employers reduce pay deal projections to 4 per cent for 2024: XpertHR
A recent survey reveals that British employers have revised down their projected pay increases for 2024, signalling a potential easing of inflationary pressures. The median forecast for pay raises in British companies has decreased to 4 per cent from last year’s level of 6 per cent, Reuters reported.
This comes ahead of the Bank of England‘s imminent announcement on interest rates on Thursday. The Bank is closely monitoring pay indicators, including data from XpertHR, to gauge the extent of inflationary pressures. XpertHR also notes a decrease in actual pay settlements, from 5.1 per cent to 4.8 per cent for the three-month period ending in February.
US Federal Reserve meeting; UK inflation in spotlight today
Today, all eyes are focused on the US Federal Reserve‘s monetary policy announcement. Although it’s widely expected that the Fed will maintain interest rates within the 5.25 per cent -5.50 per cent range during its meeting on March 19-20, investors are eagerly awaiting Chair Powell’s remarks and the release of the Fed’s dot-plot, which provides insights into the anticipated future path of interest rates.
In the UK, the Office for National Statistics is anticipated to report a slowdown in the year-on-year growth of headline consumer prices, decreasing from 4.0 per cent in January to 3.5 per cent in February. Meanwhile, several prominent figures from the European Central Bank, including President Christine Lagarde, Philip R. Lane, and Isabel Schnabel, will be addressing the public.
On another note, the Bank of England is expected to maintain its rates at 5.25 per cent on Thursday, with market expectations suggesting a more gradual adjustment pace compared to the European Central Bank and the Federal Reserve throughout the year.
Alongside central bank decisions, a plethora of economic data releases are scheduled, including UK inflation figures, purchasing managers’ index data from G7 nations and India, as well as US home sales statistics. Projections indicate that the UK Consumer Price Index (CPI) for February may decrease from 4 per cent to 3.5 per cent year-on-year, while core figures are estimated to drop from 5.1 per cent to 4.6 per cent year-on-year.
Asia stocks on edge ahead of US Fed meeting; Oil prices dip
On Wall Street, the S&P 500 index rose by 0.6 per cent, with International Paper performing the best, gaining 11 per cent, while Super Micro Computer saw the biggest drop, falling by nearly 9 per cent. The Nasdaq Composite also experienced a slight increase of 0.4 per cent.
In Asia, Tokyo’s Nikkei N225 was closed for a holiday, but Nikkei futures rose by 0.60 per cent due to the yen’s weakening after the Bank of Japan announced the end of negative interest rates, a decision that had been expected. South Korea’s Kospi index rose by 1 per cent, while Australia’s resource-heavy shares increased by 0.1 per cent. However, China’s CSI300 blue chips declined by 0.2 per cent, and Hong Kong’s Hang Seng index remained unchanged.
Oil prices retreated from recent highs due to a stronger dollar, with Brent crude falling by 0.3 per cent to $87.14 per barrel and U.S. crude dropping by 0.43 per cent to $83.11 per barrel. Gold prices remained stable at $2,158.3 per ounce, still below the record high of $2,194.99 set earlier in the month.