Futures slip after Trump’s wiretap accusation
U.S. stock index futures slipped on Monday as President Donald Trump’s accusation that his predecessor, Barack Obama, wiretapped him cast a shadow on the market. Some investors believe that the latest development could distract Trump from his economic agenda of introducing tax cuts and simplifying regulations. The S&P 500 and the Nasdaq have risen for six straight weeks, extending a post-election rally that started in November. Investors are focusing more on politics and have become more selective in what they buy, the Bank for International Settlements said on Monday in its latest signal that markets may be breaking free from a dependence on central bank support. The shift was evident on Friday when Wall Street barely budged after Federal Reserve Chair Janet Yellen signalled a rate hike at the central bank’s meeting on March 14-15.
Draghi Seen Keeping Cool on Stimulus Drive Amid Inflation Surge
A timeline for the end of European Central Bank stimulus is taking shape among economists. Policy makers will wait until at least June before upgrading their assessment of the risks to the euro-area recovery and won’t announce another reduction in bond purchases until September, according to most respondents in a Bloomberg survey. Tapering quantitative easing and starting to raise interest rates will take until at least the end of next year and possibly into 2019. Despite more than three years of growth and inflation that is now nominally above his goal, ECB President Mario Draghi is pushing back against calls to reduce monetary support for the euro area. The chronology envisaged in the survey would give officials space to judge risks including populist gains in national elections this year and the impact of U.S. President Donald Trump’s economic policies.
China Feb data expected to show solid growth as Beijing vows to tackle debt
A flurry of data in coming weeks is expected to show China posted solid economic growth in February, even as the government trimmed its growth target for the year to focus on containing the risks from a rapid build-up in debt. Export and import growth is expected to hit multi-year highs, according to Reuters polls, adding to views that the global economy are shifting into higher gear and giving China’s policymakers more confidence to press ahead on oft-delayed structural reforms. China’s first-quarter economic growth could accelerate to 7 percent year-on-year, from 6.8 percent in the last quarter, economists at OCBC wrote in a note on Monday, while adding the pace may ease beginning in spring. Reflecting continued strength in its manufacturing sector, and particularly heavy industry, China’s producer price index likely rose 7.7 percent from a year earlier, the sharpest gain in nearly 9 years.
Brazil services slow contraction in Feb, index at two-year high
Brazilian services activity contracted at the slowest pace in two years in February, contributing to signs that Latin America’s economy may soon turn the corner on a deep recession. The Purchasing Managers Index (PMI) for Brazilian services, compiled by research firm Markit, rose to 46.4 in February from 45.1 in January, hitting its highest mark since March 2015. The index has been below the 50 mark that separates contraction from expansion since February 2015. Markit’s Composite Index, which takes into account manufacturing and services activity, also rose to its highest since March 2015, hitting 46.6 in February after a five-month low of 44.7 in January.