U.S. Stocks End Mixed as Trade War Concerns Ease: Markets Wrap
U.S. stocks erased deep losses to end the day mixed as White House officials left open the possibility that President Donald Trump’s tariff proposals will spare neighbors from the most severe penalties. The dollar and Treasuries erased gains. The S&P 500 Index was little changed after falling as much as 1 percent during a session marked by thin trading. Investors spooked by the departure of pro-trade adviser Gary Cohn took solace in comments from White House Council of Economic Advisers Chairman Kevin Hassett that indicated the trade policy is not yet finalized. Trade angst still set the tone in U.S. equities, with multinationals in the Dow Jones Industrial Average leading declines, while domestically focused small caps paced gains. Treasuries pared an advance to trade little changed, while Bloomberg’s dollar index fell versus the Canadian dollar after White House spokesperson Sarah Sanders said “there are potential carve outs” for the northern nation in the coming tariffs. Elsewhere, crude fell toward $61 a barrel in New York. Investors also have their sights fixed on upcoming central bank decisions in Europe and Japan, ahead of Friday’s U.S. jobs report.
U.K.’s Top Statistician Says RPI Inflation Gauge Beyond Saving
The U.K.’s most senior statistician has a message for those calling for a reboot to improve the retail prices index — it is not, and never will be, a good measure of inflation. National Statistician John Pullinger said the RPI has long overstated inflation and it’s problems aren’t limited to the Carli formula used in its calculation. There are also shortcomings in its approach to housing costs and weighting. While RPI lost its designation as a national statistic — which is assigned to economic indicators the U.K. Statistics Authority deems to meet a quality threshold — in 2013, it is still produced due to its historic use in inflation-linked gilts. It also affects student loans and rail fares, making both more expensive than they would be under other measures. Pullinger commented alongside an analysis by the Office for National Statistics that concluded that while no measure of inflation is perfect for all uses, RPI has a “number of significant weaknesses.” The analysis comes just over a month since Bank of England Governor Mark Carney weighed on in the long-running debate, saying RPI has “known errors” and the U.K. needs to move away from using it. “It is important to recognize that the problems with RPI are many,” Pullinger wrote. “RPI does not have the potential to become a good measure of inflation.” RPI tends to overstate inflation compared with other measures, such as the consumer prices index. It’s currently around 1 percentage point higher than the CPIH rate, which is CPI including owner occupiers’ housing costs, Pullinger wrote.
China Export Surge Highlights Trump’s Cause as Tariffs Readied
China’s exports surged and its trade surplus unexpectedly widened in February, illustrating the lopsided nature of global commerce that Donald Trump is preparing to introduce protectionist measures against. Overall exports rose 44.5 percent in February from a year earlier and those to the U.S. surged 46.1 percent, customs data showed Thursday. Import growth slowed to 6.3 percent to leave a trade surplus of $33.7 billion. China’s aluminum exports ballooned to a three-year high while those of steel dropped 27 percent for the first two months. Even though seasonal effects and the yuan’s weakness last month likely distorted the data, buyers for China’s exports, from industrial metals to consumer electronics and clothing, are not in short supply. It’s in the face of such demand that the U.S. President is due to sign orders for fresh tariffs later Thursday, with more potentially on the way — despite opposition from allies, Republican lawmakers and his own chief economic adviser. “Global demand remains robust and the economies of the U.S. and Europe are expanding, that’s the biggest boost for Chinese exports,” said Xia Le, chief Asia economist at Banco Bilbao Vizcaya Argentaria SA in Hong Kong. “The risk of a trade war in which Trump increases tariffs for a broader scope of products seems to be rising.”