Wall Street set to open little changed
U.S. stocks looked set for a muted open on Wednesday as investors turned their attention to Europe, where Britain started a process to exit the European Union. Nine months after Britons voted to leave, British Prime Minister Theresa May notified EU Council President Donald Tusk in a letter that the UK is quitting the bloc it joined in 1973. The dollar rose on the Brexit development, building on gains from a day earlier, while prices of safe-haven gold also moved higher on uncertainty regarding trade policies between the EU and Britain. "The big talk of the day is Britain’s official request to leave the EU, which we think, is likely to be a counter balance for the markets for many days to come," Peter Cardillo, chief market economist, wrote in a note. Wall Street showcased an impressive recovery on Tuesday, with the Dow snapping an eight-day losing streak after robust consumer data pointed to the strength in the U.S. economy and eased jitters about the impact of a failed healthcare bill.
Spooked by yield rise, ECB wary of changing message again
European Central Bank policymakers are wary of making any new change to their policy message in April after small tweaks this month upset investors and raised the specter of surging borrowing costs for the bloc’s indebted periphery, six sources told Reuters. One of the officials, who are in or close to the Governing Council, even said the ECB had been over interpreted by markets at its March 9 meeting. Taken aback when markets started to price in an interest rate hike early next year, policymakers are keen to reassure investors that their easy-money policy is far from ending, suggesting a reluctance to change message before June, the sources said. The euro, the bloc’s government bond yields and banking stocks fell after the Reuters article was first published. While the current level of bond yields remains acceptable, a further increase would be problematic, particularly in places like Italy, Spain and Portugal, where debt payments are a major cost item and rising yields would curb spending and thwart growth.
Solid growth seen for China’s manufacturers in March as construction booms
Activity in China’s vast manufacturing sector likely grew for an eighth straight month in March as a surprise rebound in the property market added to a construction boom, boosting sales of building materials from steel to cement, a Reuters poll showed. The official manufacturing Purchasing Managers’ Index (PMI) is expected to stay at 51.6 in March, the same as in February which was the second-highest reading since July 2014, according to a median forecast of 31 economists in a Reuters poll. While that is well above the 50.0 mark which separates expansion from contraction, over a dozen cities have announced fresh property cooling measures in recent weeks to slow home price rises, raising questions over how long the solid pace of growth can be sustained. Home sales rebounded in the first two months of the year with an increase in new starts, defying previous government curbs to contain bubbly prices in big cities such as Beijing. "Many projects started in March as it is usually the peak season," said Shen Jianguang, analyst at Mizuho Securities in Hong Kong. Profits of Chinese industrial firms surged almost 32 percent in the first two months of 2017 — the fastest pace in nearly 6 years — as prices of commodities from coal to iron ore raced higher.