Global Equities Continue to Rally
Stocks are higher on Friday. Globally equities continued to rise in Asia which has spilled over into Europe. Shanghai was up more than 1%, allowing European bourses to continue to rise. The Bank of Japan left policy unchanged as widely expected. Brexit has now been extended to the end of the month where a vote on how to proceed with be taken.
Bank of Japan Left Rates Unchanged
The Bank of Japan left short-term interest rates unchanged as expected. The BoJ cut its estimate of exports, and output to bring their forecasts in line with the market. The issue the BoJ is facing is a sales tax increase as a fiscal headwind that could undermine the work they have been doing. At least two dissents have looked for further stimulus to further increase economic activity.
In China, the stimulus continues to help increase growth expectations. Premier Li reaffirmed a 2-trillion tax cuts will go into effect on April 1. Additionally, a new treatment of forced technology transfers that are more lenient will go into effect.
Brexit Continues to Linger
On Thursday the British Parliament voted to extend the Withdrawal vote. It appears if the vote is successful this will be extended for possibly another few months to determine the proper legislation around Brexit. If the vote values, the delay could be left up to the EU. This could be the third no vote on the withdrawal bill after 2-defeats this week. There does seem to be enough votes to push this bill over the finish line.
The alternative for parliament is that there is a long extension, which could lead to a second referendum. If the vote next week does not pass, there could be a final vote after the EU’s summit at the end of March.
The US Labor Department reported that US import prices increased more than expected rising 0.6% in February driving by higher consumer discretionary items and fuel. The increase was the largest gain in 9-month and bucked the trend of lower figures seen earlier in the week. Recall, both CPI and PPI came in milder than expected. Energy prices are also on the rise as crude oil prices are in the process of breaking out. The rise in February import prices follows a 0.3% increase in January. Expectations had been for a 0.3% increase. Import prices declined 1.3% year over year compared to a 1.6% decline in January. Crude oil import prices rose 4.7% year over year. This followed a solid 7.1% year over year rise in crude oil import prices seen in January.
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