GLOBAL CAPITAL MARKETS OVERVIEW, ANALYSIS & FORECASTS:

Author: Dr. Alexander APOSTOLOV (researcher at Economic Research Institute at BAS)

Major U.S. stock indexes fell more than 1% on Friday afternoon as investors focused on the collapse of a Silicon Valley bank and digested the latest jobs data. On Friday, the FDIC shut down the California bank, which controls its deposits. Earlier, a deposit run doomed the tech-focused lender to sell shares to shore up its balance sheet amid losses on bond sales. Meanwhile, the jobs report showed U.S. employers hired more workers than expected in February, with nonfarm payrolls rising by 311,000. On the other hand, an unexpected rise in the unemployment rate to 3.6% and a cooling in wage inflation eased some concerns that a still-tight labor market would prompt a sharp hike in interest rates. The Dow is set to drop more than 4% for the week, with the Dow set for its worst week since September. 

On Friday, the S&P/TSX composite index fell 1.5% to close at 19,770, its lowest level since early January, tracking losses on Wall Street peers as investors weighed a slew of labor market data. Canada’s unemployment rate beat expectations at 5% in February, staying near a record low of 4.9%, which hit briefly last year, adding 22,000 jobs. The results challenged the Bank of Canada's expectations that stagnant growth in the previous quarter could weigh on the labor market, stoking fears that the central bank could take a tougher stance if the torrid economic data continues. Toronto's heavily weighted financial sector fell 2.2% on jitters in U.S. markets after SVB Group was forced to sell debt instruments to meet depositors' withdrawal demands. Major Canadian banks fell, with BMO (-2.6%), TD Bank (-2.1%), and Royal Bank of Canada (1.7%) posting losses. The Toronto Stock Exchange had its worst week in five months, closing it down 4%.

The Baltic Exchange's leading shipping index, which measures the cost of shipping goods worldwide, edged up for the 16th consecutive session on Friday, climbing about 3.3% to its highest point since the end of December 2022 at 1,424 points against stronger demand across all vessel segments. The capesize index, which tracks iron ore and coal cargoes of 150,000 tons, rose for the 15th consecutive day, climbing 5.5% to an 11-week high of 1,744 points; and the Panamax index, which tracks coal or grain cargoes of about 60,000 to 70,000 tons, rose 1.9% to 1,654 points. Among smaller vessels, the supramax index increased by 29 points to 1,209 points. The benchmark index advanced approximately 17.6% for the week.

European shares closed down 1.5% on Friday as investors weighed signs of stress in the U.S. banking system against U.S. jobs data. Financials led losses, with the European banking index falling 3.9 percent, its biggest one-day drop since early June, after tech bank SVB Financial announced it would raise capital to shore up its balance sheet as customer deposits dwindled. Deutsche Bank (-7.2%), HSBC (-4.8%), Santander (-4.3%), BNP Paribas (-4%), and UniCredit (-3.2%) were the worst performers. Meanwhile, the latest U.S. jobs report showed that job growth accelerated in the world's largest economy, with 311,000 jobs created in February, beating expectations for 205,000. On the other hand, wage growth was slightly weaker than expected, while the unemployment rate rose as more people entered the labor force. The STOXX 600 fell 2.5% for the week, and Germany's DAX 40 lost 1.2% amid hawkish comments from Fed Chairman Jerome Powell. The FTSE MIB fell 1.6% on Friday to close at 27,282 and is down 2% for the week after US-based SVB Financial Group was forced to sell debt securities in response to an outflow of deposits in an attempt to raise funds by selling shares, Triggered a massive sell-off in U.S. and European banks. Finecobank and BPER Banca were the biggest losers in the sector, both down 4.5%, extending the previous session's slump. Meanwhile, however, However, investors continued to assess how much the Federal Reserve will raise interest rates this month after the U.S. economy added more jobs than expected, although the unemployment rate and average wage growth also rose. On the domestic data front, base effects pushed Italy's PPI to an annualized 11.1% increase last month, well below January's 31.7%. On Friday, the CAC 40 index fell about 1.1% to close at a two-week low of 7,221, its fourth straight day of losses and in line with regional peers. The sentiment was weighed by uncertainty over the extent of the Federal Reserve's next rate hike and concerns over SVB Financial Group's possible collapse in the banking sector. The U.S. jobs report showed higher-than-expected job growth on the data front, but the unemployment rate unexpectedly rose, and wage growth slowed. Financials led the gains, with Societe Generale (-4.5%), BNP Paribas (-3.8%), and Crédit Agricole (-2.5%) falling sharply. On the other hand, Eurofins Scientifique (+2.8%) and Carrefour (+1.4) were the top gainers. For the week, France's main stock index fell about 1.7 percent. The IBEX 35 plunged to 9267 on Friday, following its European counterparts, as investors weighed US jobs data against signs of stress in the US banking system. Technology lender SVB Financial has announced a capital raise to shore up its balance sheet amid declining customer deposits. Meanwhile, the U.S. economy unexpectedly created 311,000 jobs in February of 2023, above market forecasts of 205,000 but down from an earlier 504. On the corporate front, Banco Sabadell (-5.11%), Bankinter (-4.22%), and Banco Santander (-4.21%) closed as the biggest laggards. Aena (2.18%) and Iberdrola (0.05%) were among the few protagonists. Iberdrola's US subsidiary Avangrid and PNM Resources have filed a joint petition with the New Mexico Public Regulatory Commission to drop the appeal against their merger.

London shares fell for a second straight session on Friday, dragged down by financials and materials stocks, with the blue-chip FTSE 100 down nearly 2% to close at a one-month low of 7,730. Hints of strain in the U.S. banking system rattled global markets after U.S. tech sector lender SVB Financial Group launched a share sale to shore up its balance sheet. Stocks are already under pressure amid fears that high-interest rates will trigger a global recession. Major banks, including Natwest Group, Barclays, Lloyds Banking Group, Intermediate Capital Group, and HSBC, tumbled between 3.5 percent and 6.7 percent. On the economic front, UK economic output rose by a stronger-than-expected 0.3% month-on-month in January, supporting speculation that the Bank of England will raise interest rates again later this month. As a result, the export-oriented index fell more than 2.5% for the week, its biggest weekly drop since September 2022.

The ruble-based MOEX Russia index fell 0.6% to close at 2,276 on Friday, extending a slight retreat from last month amid continued pressure from oil producers and banks. Both Surgut and Tatneft fell nearly 1 percent as investors continued to assess the impact that oil production and export cuts might have on Urals oil prices and the Russian Federation's energy revenues. Meanwhile, bank closures were mixed as sanctions insulated Russia's financial sector from Western financial markets and prevented contagion from a collapse in Europe and the United States. Still, financials posted losses, sending shares down 5% after a dividend proposal on the Moscow Exchange disappointed investors. On the data front, investors awaited the release of Russia's inflation rate for February after the market close for a possible resumption of the tightening policy by the CBR. For the week, the benchmark index closed up 0.6%.

On Friday, the China Shanghai Composite Index fell 1.17 percent to close at 3,230 points. In comparison, the Shenzhen Composite dropped 1.19 percent to close at 11,443 points, falling for a fifth straight session, tracking a sell-off led by Wall Street banks overnight amid fears that borrowers will Default and higher interest rates are weighing on bank balance sheets. Benchmarks also posted sharp weekly losses, dragged down by disappointing growth targets for China's economy set by the National People's Congress over the weekend. Heavyweights such as BYD Corporation (-5.2%), Inspur Electronics (-6.5%), Avionics (-12.6%), China United Network (-4.2%), and China Telecom (-2.9%) posted significant losses.

Hong Kong shares tumbled 492 points, or 2.47%, to a near 11-week low of 19,433 in early trade on Friday, extending losses for a fourth straight day and dropping more than 5% for the week, pressured by an overnight plunge on Wall Street was concerned about a prolonged period of high U.S. interest rates ahead of the release of February employment data later in the day.

The Nikkei 225 fell 1.1% to around 28,300, while the broader Topix fell 1% to 2,050 on Friday, retreating sharply from multi-month highs, as investors weighed in on Bank of Japan Governor Haruhiko Kuroda. Kuroda's last meeting before turning cautious before making a policy decision. Japanese stocks also tracked an overnight Wall Street bank-led sell-off amid fears that rising interest rates would weigh on bank balance sheets as borrowers default. Financial stocks led the market lower, with Mitsubishi UFJ (-2.6%), Sumitomo Mitsui (-1.9%), and Mizuho Financial (-1.2%) falling sharply. All other sectors were down, including index heavyweights such as Fast Retailing (-2.1%), SoftBank Group (-3%), Sony Group (-26%), Keyence (-1.8%) and Nippon Steel (-1.5%) ). Still, the benchmark was on track for a second straight weekly gain.

The Australia S&P/ASX 200 fell more than 1.5% to below 7,200 on Friday, hitting its lowest level in nearly two months and tracking Wall Street's losses overnight, as investors worried about the key monthly U.S. release. The Fed will likely tighten monetary policy further ahead of the jobs report. However, on Wednesday, Reserve Bank of Australia Governor Philip Lowe said that the central bank is close to pausing rate hikes as monetary policy becomes restrictive. The "big four" banks led the losses, with Commonwealth Bank (-2.6%), ANZ (-2.4%), Westpac (-2.5%), and National Australia Bank (-2.4%). Nearly all other sectors fell, including CSL Ltd (-1%), BHP Group (-1.5%), Woodside Energy (-2.2%), Pilbara Mining (-3.9%), and Qantas (-3.3%) ) and other index heavyweights. The benchmark index was on track for a fifth straight weekly decline.

New Zealand shares fell 110.10 points, or 0.93%, to a two-month low of 11,716.06 in midday trade on Friday, marking a third straight session of losses and a 1.29% loss for the week, as Wall Street fell on Thursday and traders worried about Friday's The jobs report could spur the Fed to raise rates more aggressively. Investors are also awaiting a policy decision from the Bank of Japan later in the day, which is expected to keep interest rates ultra-low. Locally, the latest data showed retail card spending was flat in February, as storm disruptions affected consumers' spending habits. Market participants ignored new data showing factory activity rose to a six-month high in February as new orders resumed expansion. Health care, materials, financial and industrial stocks were the worst losers, of which Fisher Parker Healthcare Co., Ltd. (-1.54%), Ebbes Group Co., Ltd. (-0.96%), A2 Milk Company (-1.17%), Port of Tauranga Ltd (-1.28%) fell.

 

REVIEWING THE LAST ECONOMIC DATA:

Reviewing the latest economic  news, the most critical data is:

- NZ: New Zealand's BusinessNZ Performance of Services Index rose to 55.8 in February 2023 from 54.7 in January, indicating the strongest growth in the services sector in four months. Activity/sales (53.6 vs. 52.1), new orders/business (57.1 vs. 54.8), inventories (58.3 vs. 54.7), and supplier deliveries (55.9 vs. 52.3) all increased. At the same time, the employment sub-index fell slightly (51.2 vs. 51.6). Meanwhile, negative reviews fell to 51.9 percent in February from 61.7 percent in January. The reasons varied among those who gave positive comments, with customers returning after the holidays and a general pick-up in tourism, including overseas visitors. Nevertheless, BNZ senior economist Craig Ebert said, "the strongly expanding PSI, and the recovering tone of the PMI, suggest that economic activity has grown relatively well in the early part of the year."

- RU: In 2022, Russia's corporate profits will be 25,925.6 billion rubles, a decrease of 12.6% from the previous year's 29,649.8 billion rubles, reflecting the impact of Western sanctions on large Russian companies and the entire economic sector, especially the financial and energy sectors. In December alone, the profits of Russian companies amounted to 2.18 trillion rubles, down 22.5% from 2.81 trillion rubles in December 2021.

- CA: Canada’s unemployment rate held steady at 5% in February 2023, remaining near the record low of 4.9% in June and July 2022 and beating consensus forecasts of 5.1%. The result provided further evidence of continued tightness in the labor market, challenging the Bank of Canada's expectations that recent weak economic growth would weigh on the labor market. In addition, the number of unemployed rose by 20,400 from the previous month to 1,066,400 as a decline in the unemployment rate for older men offset a rise in the core unemployment rate for older women. Nonetheless, the Canadian economy added 21,800 jobs during the period, more than double expectations, with employment in goods-producing industries growing steadily (+0.4% to 4,158,400). Meanwhile, work in service-producing industries was roughly unchanged at 15,895,700.

- US: In February 2023, the U.S. unemployment rate rose to 3.6% from a 50-year low of 3.4% in January, higher than market expectations of 3.4%. The number of unemployed people increased by 242,000 to 5.94 million; the employment level grew by 177,000 to 160.32 million. The so-called U-6 unemployment rate, which includes those who want to work but have given up looking for one and those working part-time because they cannot find full-time work, rose to 6.8% in February from 6.6% in January. The labor force participation rate increased to 62.5%, the highest since March 2020.

- US: In February 2023, the U.S. government budget deficit was $262 billion, compared with a deficit of $217 billion a year earlier, while the market expected a deficit of $256 billion. This is the largest deficit since July 2021, largely due to higher tax rebates. Expenses rose 4% yearly to $525 billion, while revenue fell 10% to $262 billion. In addition, personal withholding tax revenue rose 4% compared with a year ago, but individual tax refunds that reduce income soared 153% to $52 billion.

- US: In February 2023, the U.S. economy unexpectedly created 311,000 jobs, well above the market forecast of 205,000, following a downward revision of 504,000 jobs in January. The data continued to point to a tight labor market, with the economy adding an average of 343K monthly jobs over the past six months. It is also well above the 100,000 a month considered necessary to keep up with growth in the working-age population. Significant job growth was seen in leisure and hospitality (105K), which is a foodservice and dining establishments (70K); retail (50K), which is general merchandise retailers (39K); government (46K); professional and business services (45K); healthcare (44K); and structures (24K). On the other hand, employment fell in the information industry (-25K), namely the film and sound recording industry (-9K) and the telecommunications industry (-3K). Since November 2022, employment in the information industry has decreased by 54K. Transportation and warehousing also lost 22,000 jobs.

- FR: France's current account deficit narrows sharply to EUR 3.6 billion in January 2023, the smallest deficit since March 2022, compared to a shortage of EUR 7.6 billion in the previous month, mainly due to a reduction in the goods deficit (10.4 billion EUR against EUR 12.8 billion in December). In addition, surpluses increased in services (3.7 billion euros versus 2.7 billion euros) and primary and secondary income (3.1 billion euros versus 2.5 billion euros). As a result, in January 2022, the country posted a current account surplus of 1.1 billion euros.

- FR: In January 2023, France's trade deficit fell to 12.9 billion euros from 14.9 billion euros the previous month. Imports fell 4.5% to 62.4 billion euros, hit by lower supplies of energy and non-energy products. Exports, meanwhile, fell 2.2% month-on-month to 49.4 billion euros, mainly due to a decline in exports of goods excluding energy. As a result, the energy gap narrowed to 8.2 billion euros from 9.8 billion euros in December. Excluding fuel, the trade deficit fell to 6.9 billion euros from 7.2 billion euros.

- UK: After touching $1.18 on March 8, the pound recovered to $1.19, its lowest level since November 2022. Investors weighed U.K. economic data against the Federal Reserve's hawkish stance. Data showed that the UK economy grew 0.3% in January, slightly above market expectations of 0.1%, driven by services sector activity. On the other hand, manufacturing output contracted more than expected. On monetary policy, Federal Reserve Chairman Jerome Powell told U.S. lawmakers that the central bank might need to raise interest rates more than expected to fight inflation. The Bank of England is expected to raise rates by 25 basis points this month, its 11th consecutive hike before ending the tightening cycle. Investors are now awaiting UK employment and wages data due next week, as well as Chancellor Jeremy Hunt's new budget.

- UK: In January 2023, UK manufacturing production fell by 0.4% month-on-month after stagnating, and the decline exceeded market expectations of 0.1%. Most subsectors reported lower output, mainly basic pharmaceutical products, and preparations (-4.7%, compared to 2% in December). In addition, the output of machinery and equipment (-1.6% vs. 1.6%), computer, electronic and optical products (-1% vs. 0.1%), and coke and refined petroleum products (-0.4% vs. -1.7%) fell. As a result, on an annual basis, manufacturing output shrank to 5.2% from 5.7% in December, slightly more than the market forecast for a 5% decline.

- UK: In January 2023, the UK’s trade deficit in goods fell to 17.86 billion pounds from 19.27 billion pounds the previous month, compared with market expectations of 17.75 billion pounds. Imports fell by 8.7%, with purchases from EU and non-EU countries falling sharply. Meanwhile, exports of goods fell by 1.8%, with a decline in exports to EU countries partly offset by an increase in exports to non-EU countries.

- UK: In January 2023, the UK’s trade deficit in goods fell to 17.86 billion pounds from 19.27 billion pounds the previous month, compared with market expectations of 17.75 billion pounds. Imports fell by 8.7%, with purchases from EU and non-EU countries falling sharply. Meanwhile, exports of goods fell by 1.8%, with a decline in exports to EU countries partly offset by an increase in exports to non-EU countries.

- UK: In January 2023, UK construction output rose 0.6% year-on-year, the smallest increase since the fall in February 2021. New housing construction (-3.8%) and new jobs excluding infrastructure (-1.4%) fell, while repairs and maintenance rose by 3.9%. Compared with December 2022, construction production fell by 1.7%, the worst performance since June 2022, as economic uncertainty led to delays, cancellations, and fewer work requests by clients; this showed particularly to work in the housing sector Continued slowdown.

- UK: In January 2023, UK industrial production fell by 0.3% month-on-month, deviating from the 0.3% increase in December and slightly higher than the market forecast of 0.1%. This was the first contraction since August 2022, with output falling in manufacturing (0.4% vs. 0% in December) and mining and quarrying (-2.2% vs. -4.6%). Elsewhere, production of electricity, natural gas, steam, and air conditioning (0.5% vs. 5.2%) and water supply (0.6% vs. 0.7%) all rose at slower paces, slightly above market expectations, after falling 4% in December.

- UK: U.K. shares opened lower on Friday, led by Wall Street banks on Thursday, amid concerns that rising interest rates will weigh on bank balance sheets as borrowers default. Traders also turned cautious ahead of a key U.S. jobs report that could shed light on the Fed's tightening policy. Meanwhile, investors digested data showing that Britain's economy grew more than expected in January despite persistent fears of a recession. FTSE 100 futures were down 1.4% in pre-market trade.

- GE: In February 2023, Germany's annual inflation rate was confirmed at 8.7%, not far from the peak of 8.8% in October and November and still well above the ECB's target of around 2%. Goods inflation eased to 12.4% in February from 12.7% a month earlier, as a modest rise in energy costs (19.1% versus 23.1%) partially offset a rapid increase in food costs (21.8% versus 20.2%). Meanwhile, service costs accelerated (4.7% vs. 4.5%), with rental prices up 2.0%, the same increase as the previous month. Prices of energy products rose sharply, especially natural gas (46.6%), electricity (23.1%), and heating oil (16.1%). Consumer prices rose 0.8% month-on-month in February. Compared with other European countries, CPI rose 9.3% year-on-year, the fifth highest level on record, and increased 1% month-on-month.

- JP: The Bank of Japan (BoJ) unanimously left its key short-term interest rate unchanged at -0.1% at its March meeting, and the 10-year bond yield around 0%. The central bank has also refrained from adjusting the yield curve, including a 0.5% cap on bond purchases, tempering views that the policy's side effects must be addressed soon. Meanwhile, policymakers signaled their concern about the economy by reducing their views on exports and production while leaving their overall economic assessment unchanged. The BOJ reiterated that it would take additional easing measures if needed while expecting short-term and long-term policy rates to remain at current or lower levels. Friday's meeting was Governor Haruhiko Kuroda's last before he retires, and his successor, Kazoo Ueda, will take the helm in April. The new governor will chair the first policy meeting on April 27-28, at which time the board will provide new quarterly growth and price forecasts, which will continue into fiscal 2025.

- JP: In January 2023, Japanese household spending fell by 0.3% year-on-year in real terms, a slowdown from the 1.1% decline in December, but the drop was lower than market expectations of 0.1%. It was also the third straight month of reduction in personal spending, as intense cost pressures continued to dampen consumption. Housing (-12.1%), education (-9.6%), furniture and household appliances (-9.9%), health care (-7.1%), and transportation and communications (-1%) saw the largest declines. Meanwhile, spending on culture and entertainment (18.6%), fuel, lighting, water (5.3%), and clothing and footwear (5.1%) increased.

- JP: Producer prices in Japan rose 8.2% year-on-year in February 2023, down from a rise of 9.5% a month earlier and below the market consensus of 8.4%. It was the lowest rate of producer inflation since October 2021, and there are signs that the impact of past surges in raw material costs is fading. Beverages and food (7.6% to 7.8% in January), chemicals (4.7% to 5.7%), steel (18.5% to 18.9%), plastics (8.6% to 9.6%), and non-ferrous metals (5.3% to 6 %) has dropped in price. In addition, the cost of wood products (-10.7% vs. -8.7%) and petroleum (-4.7% vs. -0.3%) fell further. In contrast, inflation rates for textiles (6.3%), metal products (11%), and production machinery (4.7%) remained unchanged. Meanwhile, the cost of business-oriented machinery (1.1% vs. 0.7%), electrical machinery (5.6% vs. 5.5%), and transportation equipment (4.7% vs. 4.6%) rose faster, with the producer price index falling 0.4% after being flat in January %, the first drop since November 2020.

 

LOOKING AHEAD:

Today, investors should watch out for the following important data:

- USD: Fed Announcement.

- JPY: BSI Manufacturing Index.

- NZD: Visitor Arrivals m/m.

- GBP: MPC Member Dhingra Speaks.

- EUR: Eurogroup Meetings.

 

KEY EQUITY & BOND MARKET DRIVERS:

Кey factors in the stock and bond market are currently:

- FR: French 10-year OAT yields fell below 3%, retreating sharply from an 11-year high of 3.24% hit on March 6, as concerns about the financial stability of U.S. banks eased bets on more aggressive tightening by the Fed this month. Meanwhile, the European Central Bank is widely expected to raise its key interest rate by 50 basis points at its upcoming meeting to extend its fight against inflation. Hawkish calls from euro zone policymakers have reinforced speculation that the ECB deposit rate could peak at 3.75% early in the third quarter. On the fiscal front, the French Senate voted to raise the mandatory retirement age by two years to 64, defying strong opposition from trade unions.

- IT: Italy’s 10-year BTP yield fell below 4.3% in March, its lowest level over three weeks. The rebound in global bond demand was tracked after jitters in the U.S. banking sector drove investors to reconsider bets the Federal Reserve would raise interest rates more aggressively this month. Meanwhile, the ECB is widely expected to increase interest rates by 50 basis points at its next meeting, expanding its efforts to fight inflation. In addition, hawkish calls from eurozone policymakers have fueled expectations that the ECB's deposit rate could hit 3.75% early in the third quarter. On the fiscal front, the Italian government's 2022 budget deficit exceeded the government's target by 2.4 percentage points at 8%, as accounting changes prompted the early booking of pandemic tax cuts. Still, the 10-year BTP-Bund spread narrowed below 180 basis points, close to a nine-month low of 170 basis points in February.

- UK: U.K. 10-year gilt yields held at a two-week low of 3.7% as investors sought safety amid worries about the U.S. banking system and uncertainty over U.S. monetary policy. Tech lender SVB Financial Group tried to reassure its venture capital clients that their money was safe after raising money, prompting a sell-off in bank shares worldwide on Thursday. The latest labor data presented a mixed picture as Fed officials debated how long to keep rates on hold to curb inflation. The February employment report showed that the U.S. economy added more jobs than expected, wage growth was slightly weaker than expected, and the unemployment rate rose from a 50-year low in January. However, earlier last week, data showed that jobless claims hit a new high in over two months, and job creation fell less than expected.

- CA: Canada's 10-year government bond yield fell to around 3.1%, a level not seen in a month, tracking losses in its U.S. peers as investors reassessed monetary policy and growth prospects. Lingering concerns about a Fed-induced recession and the health of the U.S. banking sector have stoked demand for safe-haven assets, mainly government bonds. Domestically, the Bank of Canada said it would keep its key interest rate unchanged at current levels if the Canadian economy develops as expected. At its March meeting, the central bank paused its 4.5% rate hike cycle and, as previously implied, raised rates by 425 basis points over the past eight trading days. Policymakers pointed to weaker-than-expected GDP growth in the fourth quarter of 2022, emphasizing the need to support growth.

- GE: German 10-year government bond yields held at a two-week low of 2.5%, as investors turned to safety amid uncertainty over U.S. monetary policy and concerns about the U.S. banking system following a capital raise by Silicon Valley Bank. Meanwhile, investors digested the latest U.S. jobs report, which showed wages rose faster in February while wages rose slightly less than expected, and the unemployment rate rose from a 50-year high. In addition, data on the exceeded day showed w weekly jobless claims rose to the highest level in more than two months, pointing to a cooling U.S. labor market and prompting lower interest rate expectations.

- US: The 10-year U.S. Treasury yield fell below 3.7% on Friday, the lowest in a month, as investors digested a batch of labor market data for February. The number of non-agricultural employment in the current period totaled 311,000, much higher than the market forecast of 205,000. Other top data last week confirmed continued tightness in the U.S. labor market. Still, the unemployment rate rose by 0.2 percentage points while labor incomes moderated, suggesting the job market may be starting to feel the effects of the Fed's aggressive rate hikes. Bond yields held on to their previous session's slide after SVB Financial Group sold debt securities to meet deposit needs, raising concerns that the Federal Reserve may be forced to ease tightening policy. Money markets are now leaning towards the possibility of a 25 basis point rate hike at this month's Fed meeting.

- US: Stock futures contracts tied to the S&P 500 and Nasdaq rose 0.4% and 0.9%, respectively, while the Dow switched between modest gains and losses as investors digested the latest jobs data. A closely watched jobs report from the Labor Department showed U.S. employers hired more workers than expected in February, with nonfarm payrolls rising by 311,000 last month. Still, the same report showed the unemployment rate unexpectedly rose to 3.6% last month while wage growth slowed, alleviating some concerns that a still-tight labor market would lead to a sharp hike in interest rates. In addition, investors were rattled by fears of the banking sector's health after U.S. tech lender SVB Financial Group launched a share sale to shore up its balance sheet amid losses on bond sales. As of Thursday's close, all three major indexes were on track to end the week down at least 3%.

 

LEADING MARKET SECTORS:

- Strong sectors: --

- Weak sectors: Materials, Utilities, Real Estate, Industrials, Financials, Information Technology.

 

TOP EXPECTATIONS MARKET DRIVERS: 

Кey factors in the currency and commodities market are currently:

- EUR: As investors weighed U.S. jobs data, the euro climbed back above $1.06 after touching $1.05 on March 8, its lowest level since Jan. 6. The latest jobs report showed that the U.S. economy added 311,000 jobs in February, easily beating market expectations for 205,000, while wage growth that exceeds expectations and the unemployment rate unexpectedly rose to 3.6%. The euro fell sharply against the dollar earlier in the week after Federal Reserve Chairman Jerome Powell told U.S. law the akers the central bank could raise rates more than expected, but expectations for a rate hike eased after the NFP release. ease. Meanwhile, some policymakers at the ECB last week, with board member Robert HolzmanIn addition, detailing four 50 basis point rate hikes, President Christine Lagarde said in March that A 50 percentage point hike is "very, very likely."

- USD: On Friday, the dollar index fell more thamight% to around 104 as investors digested the labor market report. The. In contrast, the economy added more than expected 311,000 jobs in February, but the unemployment rate unexpectedly rose to 3.6%, while wage growth slowed. The dollar hit an m than three-month high earlier last week after Fed Chairman Jerome Powell told Congress that interest rates could end up higher than expected, given strong economic data, and that the central bank would be prepared to tighten the pace fastdirectecessary 105.5. However, the demand for higher interest rates eased everywhere after the release of the NFP. Markets are now pricing in a 50/50 chance that the Fed will raise rates by 25 or 50 basis points this month, compared with a higher-than-average chance of a 50-basis point hike earlier. Traders now await next week's U.S. CPI report.

- GAS: Dutch first-month futures rose 21% to 52.86 euros per megawatt-hour on Friday, the biggest jump since June and the highest level in nearly a month, pushing the weekly gain to 17.5%, amid worries about the impact of the closures of LNG terminals in France. Four LNG terminals have been shut down since late Monday due to protests against pension reform in France, and the disruptions could continue until March 14. Meanwhile, storage withdrawals set their record for the entire withdrawal season, helping to offset the impact of the shutdown in the country. Additionally, some cargo was diverted to the Netherlands and Great Britain. European gas storage tanks are 57% full, with Germany reporting a level of 65% and France at 35%. On the weather front, a cold spell in Northern Europe could persist well into next week.

- OIL: Brent crude futures rose more than 1% to above $82 a barrel on Friday, looking poised to take a three-day drop as a sharp dollar depreciation following the payroll report made the commodity priced attractively. of the greenback. However, the international benchmark remained down nearly 4% last week on lingering concerns that more aggressive tightening by the Federal Reserve could dent economic growth and curb demand. OPEC Secretary-General Haitham Al-Ghais echoed those concerns, saying that declining oil consumption in the US and Europe could threaten the market. Elsewhere, investors continued to assess the demand outlook in China, as the world's top crude importer dismantled strict Covid constraints but set a modest growth target for this year.

- WTI: WTI crude futures rose more than 1% to around $77 a barrel on Friday, looking poised to take a three-day drop as a sharp dollar depreciation following the payroll report made the commodity priced attractively. of the greenback. However, the US benchmark remained down nearly 4% last week on lingering concerns that more aggressive tightening by the Federal Reserve could dent economic growth and curb demand. OPEC Secretary-General Haitham Al-Ghais echoed those concerns, saying that declining oil consumption in the US and Europe could threaten the market. Elsewhere, investors continued to assess the demand outlook in China, as the world's top crude importer dismantled strict Covid constraints but set a modest growth target for this year.

- GLD: Gold prices rose nearly 2% to above $1860 an ounce on Friday after payroll reports sent the dollar lower. The US economy added 311,000 jobs in February, much more than expected, but the unemployment rate rose to 3.6%, and wage growth slowed, easing expectations about the need for higher interest rates. Traders now appear to be equally divided on whether the Fed will opt for a 25 or 50 basis point hike on March 22. Meanwhile, aggressive comments from ECB policymakers point to further increases in borrowing costs. In Canada, the central bank has already suspended its tightening cycle, and the Bank of Japan has maintained its extremely accommodative monetary policy as expected.

- LIT: Lithium carbonate prices in China fell to a nearly 14-month low of CNY 337,500 per tonne in March, losing 44% of their value over the past four months, driven by falling demand expectations and signs of a strong offer. After subsidizing battery makers and giving cash rewards for purchasing new electric vehicles, the Chinese government ended subsidies for the new energy car sector in January. It catalyzed a decline in demand for battery inputs from some car manufacturers. Overproducing batteries in late 2022 to take advantage of subsidies has led major battery maker CATL to sell products at a steep discount this year. The company expects carbonate prices to halve in the coming months. Meanwhile, Australia's top producer has projected global production of lithium carbonate equivalent to reach 915,000 tonnes in 2023, a 32% increase over its 2022 estimate—tons of lithium. As a result, this equals 10% of the world reserve.

 

CHART OF THE DAY:

Sterling continued to rise above $1.20, moving further away from a more than three-month low of $1.18 hit on March 8, as investors weighed mixed economic data from the U.K. and the U.S. against a hawkish Federal Reserve. Data showed that the UK economy grew by more than expected 0.3% in January despite a contraction in the manufacturing sector. In the U.S., employment data showed stronger-than-expected job growth in February, while wage growth was slightly weaker than expected. Data on Thursday showed weekly jobless claims unexpectedly jumped to a new two-month high. On the monetary policy front, Federal Reserve Chairman Jerome Powell said the central bank may need to raise interest rates more than expected to fight inflation, while the Bank of England is expected to end its current tightening cycle after its March meeting. Investors are now awaiting UK employment and wages data due on Tuesday and Chancellor Jeremy Hunt's new budget on Wednesday.

 

 

 

Long-term Channels Trading Strategy: - GPBUSD -; Chart with time-frame (D1); The primary Resistance with a potential (consolidation area) is around ~ ( 1.221 ),  and the primary Support with a potential (consolidation area) is around ~ ( 1.189 ).  Therefore, the next most probable price movement is a (sideways) trend. *see details on the chart.

GLOBAL CAPITAL MARKETS OVERVIEW, ANALYSIS & FORECASTS: Author: Dr. Alexander APOSTOLOV (researcher at Economic Research Institute at BAS) Major U.S. stock indexes fell more than 1% on Friday afternoon as investors focused on the collapse of a Silicon Valley bank and digested the latest jobs data. On Friday, the FDIC shut down the California bank, which controls its deposits. Earlier, a deposit run doomed the tech-focused lender to sell shares to shore up its balance sheet amid losses on bond sales. Meanwhile, the jobs report showed U.S. employers hired more workers than expected in February, with nonfarm payrolls rising by 311,000. On the other hand, an unexpected rise in the unemployment rate to 3.6% and a cooling in wage inflation eased some concerns that a still-tight labor market would prompt a sharp hike in interest rates. The Dow is set to drop more than 4% for the week, with the Dow set for its worst week since September.  On Friday, the S&P/TSX composite index fell 1.5% to close at 19,770, its lowest level since early January, tracking losses on Wall Street peers as investors weighed a slew of labor market data. Canada’s unemployment rate beat expectations at 5% in February, staying near a record low of 4.9%, which hit briefly last year, adding 22,000 jobs. The results challenged the Bank of Canada's expectations that stagnant growth in the previous quarter could weigh on the labor market, stoking fears that the central bank could take a tougher stance if the torrid economic data continues. Toronto's heavily weighted financial sector fell 2.2% on jitters in U.S. markets after SVB Group was forced to sell debt instruments to meet depositors' withdrawal demands. Major Canadian banks fell, with BMO (-2.6%), TD Bank (-2.1%), and Royal Bank of Canada (1.7%) posting losses. The Toronto Stock Exchange had its worst week in five months, closing it down 4%. The Baltic Exchange's leading shipping index, which measures the cost of shipping goods worldwide, edged up for the 16th consecutive session on Friday, climbing about 3.3% to its highest point since the end of December 2022 at 1,424 points against stronger demand across all vessel segments. The capesize index, which tracks iron ore and coal cargoes of 150,000 tons, rose for the 15th consecutive day, climbing 5.5% to an 11-week high of 1,744 points; and the Panamax index, which tracks coal or grain cargoes of about 60,000 to 70,000 tons, rose 1.9% to 1,654 points. Among smaller vessels, the supramax index increased by 29 points to 1,209 points. The benchmark index advanced approximately 17.6% for the week. European shares closed down 1.5% on Friday as investors weighed signs of stress in the U.S. banking system against U.S. jobs data. Financials led losses, with the European banking index falling 3.9 percent, its biggest one-day drop since early June, after tech bank SVB Financial announced it would raise capital to shore up its balance sheet as customer deposits dwindled. Deutsche Bank (-7.2%), HSBC (-4.8%), Santander (-4.3%), BNP Paribas (-4%), and UniCredit (-3.2%) were the worst performers. Meanwhile, the latest U.S. jobs report showed that job growth accelerated in the world's largest economy, with 311,000 jobs created in February, beating expectations for 205,000. On the other hand, wage growth was slightly weaker than expected, while the unemployment rate rose as more people entered the labor force. The STOXX 600 fell 2.5% for the week, and Germany's DAX 40 lost 1.2% amid hawkish comments from Fed Chairman Jerome Powell. The FTSE MIB fell 1.6% on Friday to close at 27,282 and is down 2% for the week after US-based SVB Financial Group was forced to sell debt securities in response to an outflow of deposits in an attempt to raise funds by selling shares, Triggered a massive sell-off in U.S. and European banks. Finecobank and BPER Banca were the biggest losers in the sector, both down 4.5%, extending the previous session's slump. Meanwhile, however, However, investors continued to assess how much the Federal Reserve will raise interest rates this month after the U.S. economy added more jobs than expected, although the unemployment rate and average wage growth also rose. On the domestic data front, base effects pushed Italy's PPI to an annualized 11.1% increase last month, well below January's 31.7%. On Friday, the CAC 40 index fell about 1.1% to close at a two-week low of 7,221, its fourth straight day of losses and in line with regional peers. The sentiment was weighed by uncertainty over the extent of the Federal Reserve's next rate hike and concerns over SVB Financial Group's possible collapse in the banking sector. The U.S. jobs report showed higher-than-expected job growth on the data front, but the unemployment rate unexpectedly rose, and wage growth slowed. Financials led the gains, with Societe Generale (-4.5%), BNP Paribas (-3.8%), and Crédit Agricole (-2.5%) falling sharply. On the other hand, Eurofins Scientifique (+2.8%) and Carrefour (+1.4) were the top gainers. For the week, France's main stock index fell about 1.7 percent. The IBEX 35 plunged to 9267 on Friday, following its European counterparts, as investors weighed US jobs data against signs of stress in the US banking system. Technology lender SVB Financial has announced a capital raise to shore up its balance sheet amid declining customer deposits. Meanwhile, the U.S. economy unexpectedly created 311,000 jobs in February of 2023, above market forecasts of 205,000 but down from an earlier 504. On the corporate front, Banco Sabadell (-5.11%), Bankinter (-4.22%), and Banco Santander (-4.21%) closed as the biggest laggards. Aena (2.18%) and Iberdrola (0.05%) were among the few protagonists. Iberdrola's US subsidiary Avangrid and PNM Resources have filed a joint petition with the New Mexico Public Regulatory Commission to drop the appeal against their merger. London shares fell for a second straight session on Friday, dragged down by financials and materials stocks, with the blue-chip FTSE 100 down nearly 2% to close at a one-month low of 7,730. Hints of strain in the U.S. banking system rattled global markets after U.S. tech sector lender SVB Financial Group launched a share sale to shore up its balance sheet. Stocks are already under pressure amid fears that high-interest rates will trigger a global recession. Major banks, including Natwest Group, Barclays, Lloyds Banking Group, Intermediate Capital Group, and HSBC, tumbled between 3.5 percent and 6.7 percent. On the economic front, UK economic output rose by a stronger-than-expected 0.3% month-on-month in January, supporting speculation that the Bank of England will raise interest rates again later this month. As a result, the export-oriented index fell more than 2.5% for the week, its biggest weekly drop since September 2022. The ruble-based MOEX Russia index fell 0.6% to close at 2,276 on Friday, extending a slight retreat from last month amid continued pressure from oil producers and banks. Both Surgut and Tatneft fell nearly 1 percent as investors continued to assess the impact that oil production and export cuts might have on Urals oil prices and the Russian Federation's energy revenues. Meanwhile, bank closures were mixed as sanctions insulated Russia's financial sector from Western financial markets and prevented contagion from a collapse in Europe and the United States. Still, financials posted losses, sending shares down 5% after a dividend proposal on the Moscow Exchange disappointed investors. On the data front, investors awaited the release of Russia's inflation rate for February after the market close for a possible resumption of the tightening policy by the CBR. For the week, the benchmark index closed up 0.6%. On Friday, the China Shanghai Composite Index fell 1.17 percent to close at 3,230 points. In comparison, the Shenzhen Composite dropped 1.19 percent to close at 11,443 points, falling for a fifth straight session, tracking a sell-off led by Wall Street banks overnight amid fears that borrowers will Default and higher interest rates are weighing on bank balance sheets. Benchmarks also posted sharp weekly losses, dragged down by disappointing growth targets for China's economy set by the National People's Congress over the weekend. Heavyweights such as BYD Corporation (-5.2%), Inspur Electronics (-6.5%), Avionics (-12.6%), China United Network (-4.2%), and China Telecom (-2.9%) posted significant losses. Hong Kong shares tumbled 492 points, or 2.47%, to a near 11-week low of 19,433 in early trade on Friday, extending losses for a fourth straight day and dropping more than 5% for the week, pressured by an overnight plunge on Wall Street was concerned about a prolonged period of high U.S. interest rates ahead of the release of February employment data later in the day. The Nikkei 225 fell 1.1% to around 28,300, while the broader Topix fell 1% to 2,050 on Friday, retreating sharply from multi-month highs, as investors weighed in on Bank of Japan Governor Haruhiko Kuroda. Kuroda's last meeting before turning cautious before making a policy decision. Japanese stocks also tracked an overnight Wall Street bank-led sell-off amid fears that rising interest rates would weigh on bank balance sheets as borrowers default. Financial stocks led the market lower, with Mitsubishi UFJ (-2.6%), Sumitomo Mitsui (-1.9%), and Mizuho Financial (-1.2%) falling sharply. All other sectors were down, including index heavyweights such as Fast Retailing (-2.1%), SoftBank Group (-3%), Sony Group (-26%), Keyence (-1.8%) and Nippon Steel (-1.5%) ). Still, the benchmark was on track for a second straight weekly gain. The Australia S&P/ASX 200 fell more than 1.5% to below 7,200 on Friday, hitting its lowest level in nearly two months and tracking Wall Street's losses overnight, as investors worried about the key monthly U.S. release. The Fed will likely tighten monetary policy further ahead of the jobs report. However, on Wednesday, Reserve Bank of Australia Governor Philip Lowe said that the central bank is close to pausing rate hikes as monetary policy becomes restrictive. The "big four" banks led the losses, with Commonwealth Bank (-2.6%), ANZ (-2.4%), Westpac (-2.5%), and National Australia Bank (-2.4%). Nearly all other sectors fell, including CSL Ltd (-1%), BHP Group (-1.5%), Woodside Energy (-2.2%), Pilbara Mining (-3.9%), and Qantas (-3.3%) ) and other index heavyweights. The benchmark index was on track for a fifth straight weekly decline. New Zealand shares fell 110.10 points, or 0.93%, to a two-month low of 11,716.06 in midday trade on Friday, marking a third straight session of losses and a 1.29% loss for the week, as Wall Street fell on Thursday and traders worried about Friday's The jobs report could spur the Fed to raise rates more aggressively. Investors are also awaiting a policy decision from the Bank of Japan later in the day, which is expected to keep interest rates ultra-low. Locally, the latest data showed retail card spending was flat in February, as storm disruptions affected consumers' spending habits. Market participants ignored new data showing factory activity rose to a six-month high in February as new orders resumed expansion. Health care, materials, financial and industrial stocks were the worst losers, of which Fisher Parker Healthcare Co., Ltd. (-1.54%), Ebbes Group Co., Ltd. (-0.96%), A2 Milk Company (-1.17%), Port of Tauranga Ltd (-1.28%) fell.   REVIEWING THE LAST ECONOMIC DATA: Reviewing the latest economic  news, the most critical data is: - NZ: New Zealand's BusinessNZ Performance of Services Index rose to 55.8 in February 2023 from 54.7 in January, indicating the strongest growth in the services sector in four months. Activity/sales (53.6 vs. 52.1), new orders/business (57.1 vs. 54.8), inventories (58.3 vs. 54.7), and supplier deliveries (55.9 vs. 52.3) all increased. At the same time, the employment sub-index fell slightly (51.2 vs. 51.6). Meanwhile, negative reviews fell to 51.9 percent in February from 61.7 percent in January. The reasons varied among those who gave positive comments, with customers returning after the holidays and a general pick-up in tourism, including overseas visitors. Nevertheless, BNZ senior economist Craig Ebert said, "the strongly expanding PSI, and the recovering tone of the PMI, suggest that economic activity has grown relatively well in the early part of the year." - RU: In 2022, Russia's corporate profits will be 25,925.6 billion rubles, a decrease of 12.6% from the previous year's 29,649.8 billion rubles, reflecting the impact of Western sanctions on large Russian companies and the entire economic sector, especially the financial and energy sectors. In December alone, the profits of Russian companies amounted to 2.18 trillion rubles, down 22.5% from 2.81 trillion rubles in December 2021. - CA: Canada’s unemployment rate held steady at 5% in February 2023, remaining near the record low of 4.9% in June and July 2022 and beating consensus forecasts of 5.1%. The result provided further evidence of continued tightness in the labor market, challenging the Bank of Canada's expectations that recent weak economic growth would weigh on the labor market. In addition, the number of unemployed rose by 20,400 from the previous month to 1,066,400 as a decline in the unemployment rate for older men offset a rise in the core unemployment rate for older women. Nonetheless, the Canadian economy added 21,800 jobs during the period, more than double expectations, with employment in goods-producing industries growing steadily (+0.4% to 4,158,400). Meanwhile, work in service-producing industries was roughly unchanged at 15,895,700. - US: In February 2023, the U.S. unemployment rate rose to 3.6% from a 50-year low of 3.4% in January, higher than market expectations of 3.4%. The number of unemployed people increased by 242,000 to 5.94 million; the employment level grew by 177,000 to 160.32 million. The so-called U-6 unemployment rate, which includes those who want to work but have given up looking for one and those working part-time because they cannot find full-time work, rose to 6.8% in February from 6.6% in January. The labor force participation rate increased to 62.5%, the highest since March 2020. - US: In February 2023, the U.S. government budget deficit was $262 billion, compared with a deficit of $217 billion a year earlier, while the market expected a deficit of $256 billion. This is the largest deficit since July 2021, largely due to higher tax rebates. Expenses rose 4% yearly to $525 billion, while revenue fell 10% to $262 billion. In addition, personal withholding tax revenue rose 4% compared with a year ago, but individual tax refunds that reduce income soared 153% to $52 billion. - US: In February 2023, the U.S. economy unexpectedly created 311,000 jobs, well above the market forecast of 205,000, following a downward revision of 504,000 jobs in January. The data continued to point to a tight labor market, with the economy adding an average of 343K monthly jobs over the past six months. It is also well above the 100,000 a month considered necessary to keep up with growth in the working-age population. Significant job growth was seen in leisure and hospitality (105K), which is a foodservice and dining establishments (70K); retail (50K), which is general merchandise retailers (39K); government (46K); professional and business services (45K); healthcare (44K); and structures (24K). On the other hand, employment fell in the information industry (-25K), namely the film and sound recording industry (-9K) and the telecommunications industry (-3K). Since November 2022, employment in the information industry has decreased by 54K. Transportation and warehousing also lost 22,000 jobs. - FR: France's current account deficit narrows sharply to EUR 3.6 billion in January 2023, the smallest deficit since March 2022, compared to a shortage of EUR 7.6 billion in the previous month, mainly due to a reduction in the goods deficit (10.4 billion EUR against EUR 12.8 billion in December). In addition, surpluses increased in services (3.7 billion euros versus 2.7 billion euros) and primary and secondary income (3.1 billion euros versus 2.5 billion euros). As a result, in January 2022, the country posted a current account surplus of 1.1 billion euros. - FR: In January 2023, France's trade deficit fell to 12.9 billion euros from 14.9 billion euros the previous month. Imports fell 4.5% to 62.4 billion euros, hit by lower supplies of energy and non-energy products. Exports, meanwhile, fell 2.2% month-on-month to 49.4 billion euros, mainly due to a decline in exports of goods excluding energy. As a result, the energy gap narrowed to 8.2 billion euros from 9.8 billion euros in December. Excluding fuel, the trade deficit fell to 6.9 billion euros from 7.2 billion euros. - UK: After touching $1.18 on March 8, the pound recovered to $1.19, its lowest level since November 2022. Investors weighed U.K. economic data against the Federal Reserve's hawkish stance. Data showed that the UK economy grew 0.3% in January, slightly above market expectations of 0.1%, driven by services sector activity. On the other hand, manufacturing output contracted more than expected. On monetary policy, Federal Reserve Chairman Jerome Powell told U.S. lawmakers that the central bank might need to raise interest rates more than expected to fight inflation. The Bank of England is expected to raise rates by 25 basis points this month, its 11th consecutive hike before ending the tightening cycle. Investors are now awaiting UK employment and wages data due next week, as well as Chancellor Jeremy Hunt's new budget. - UK: In January 2023, UK manufacturing production fell by 0.4% month-on-month after stagnating, and the decline exceeded market expectations of 0.1%. Most subsectors reported lower output, mainly basic pharmaceutical products, and preparations (-4.7%, compared to 2% in December). In addition, the output of machinery and equipment (-1.6% vs. 1.6%), computer, electronic and optical products (-1% vs. 0.1%), and coke and refined petroleum products (-0.4% vs. -1.7%) fell. As a result, on an annual basis, manufacturing output shrank to 5.2% from 5.7% in December, slightly more than the market forecast for a 5% decline. - UK: In January 2023, the UK’s trade deficit in goods fell to 17.86 billion pounds from 19.27 billion pounds the previous month, compared with market expectations of 17.75 billion pounds. Imports fell by 8.7%, with purchases from EU and non-EU countries falling sharply. Meanwhile, exports of goods fell by 1.8%, with a decline in exports to EU countries partly offset by an increase in exports to non-EU countries. - UK: In January 2023, the UK’s trade deficit in goods fell to 17.86 billion pounds from 19.27 billion pounds the previous month, compared with market expectations of 17.75 billion pounds. Imports fell by 8.7%, with purchases from EU and non-EU countries falling sharply. Meanwhile, exports of goods fell by 1.8%, with a decline in exports to EU countries partly offset by an increase in exports to non-EU countries. - UK: In January 2023, UK construction output rose 0.6% year-on-year, the smallest increase since the fall in February 2021. New housing construction (-3.8%) and new jobs excluding infrastructure (-1.4%) fell, while repairs and maintenance rose by 3.9%. Compared with December 2022, construction production fell by 1.7%, the worst performance since June 2022, as economic uncertainty led to delays, cancellations, and fewer work requests by clients; this showed particularly to work in the housing sector Continued slowdown. - UK: In January 2023, UK industrial production fell by 0.3% month-on-month, deviating from the 0.3% increase in December and slightly higher than the market forecast of 0.1%. This was the first contraction since August 2022, with output falling in manufacturing (0.4% vs. 0% in December) and mining and quarrying (-2.2% vs. -4.6%). Elsewhere, production of electricity, natural gas, steam, and air conditioning (0.5% vs. 5.2%) and water supply (0.6% vs. 0.7%) all rose at slower paces, slightly above market expectations, after falling 4% in December. - UK: U.K. shares opened lower on Friday, led by Wall Street banks on Thursday, amid concerns that rising interest rates will weigh on bank balance sheets as borrowers default. Traders also turned cautious ahead of a key U.S. jobs report that could shed light on the Fed's tightening policy. Meanwhile, investors digested data showing that Britain's economy grew more than expected in January despite persistent fears of a recession. FTSE 100 futures were down 1.4% in pre-market trade. - GE: In February 2023, Germany's annual inflation rate was confirmed at 8.7%, not far from the peak of 8.8% in October and November and still well above the ECB's target of around 2%. Goods inflation eased to 12.4% in February from 12.7% a month earlier, as a modest rise in energy costs (19.1% versus 23.1%) partially offset a rapid increase in food costs (21.8% versus 20.2%). Meanwhile, service costs accelerated (4.7% vs. 4.5%), with rental prices up 2.0%, the same increase as the previous month. Prices of energy products rose sharply, especially natural gas (46.6%), electricity (23.1%), and heating oil (16.1%). Consumer prices rose 0.8% month-on-month in February. Compared with other European countries, CPI rose 9.3% year-on-year, the fifth highest level on record, and increased 1% month-on-month. - JP: The Bank of Japan (BoJ) unanimously left its key short-term interest rate unchanged at -0.1% at its March meeting, and the 10-year bond yield around 0%. The central bank has also refrained from adjusting the yield curve, including a 0.5% cap on bond purchases, tempering views that the policy's side effects must be addressed soon. Meanwhile, policymakers signaled their concern about the economy by reducing their views on exports and production while leaving their overall economic assessment unchanged. The BOJ reiterated that it would take additional easing measures if needed while expecting short-term and long-term policy rates to remain at current or lower levels. Friday's meeting was Governor Haruhiko Kuroda's last before he retires, and his successor, Kazoo Ueda, will take the helm in April. The new governor will chair the first policy meeting on April 27-28, at which time the board will provide new quarterly growth and price forecasts, which will continue into fiscal 2025. - JP: In January 2023, Japanese household spending fell by 0.3% year-on-year in real terms, a slowdown from the 1.1% decline in December, but the drop was lower than market expectations of 0.1%. It was also the third straight month of reduction in personal spending, as intense cost pressures continued to dampen consumption. Housing (-12.1%), education (-9.6%), furniture and household appliances (-9.9%), health care (-7.1%), and transportation and communications (-1%) saw the largest declines. Meanwhile, spending on culture and entertainment (18.6%), fuel, lighting, water (5.3%), and clothing and footwear (5.1%) increased. - JP: Producer prices in Japan rose 8.2% year-on-year in February 2023, down from a rise of 9.5% a month earlier and below the market consensus of 8.4%. It was the lowest rate of producer inflation since October 2021, and there are signs that the impact of past surges in raw material costs is fading. Beverages and food (7.6% to 7.8% in January), chemicals (4.7% to 5.7%), steel (18.5% to 18.9%), plastics (8.6% to 9.6%), and non-ferrous metals (5.3% to 6 %) has dropped in price. In addition, the cost of wood products (-10.7% vs. -8.7%) and petroleum (-4.7% vs. -0.3%) fell further. In contrast, inflation rates for textiles (6.3%), metal products (11%), and production machinery (4.7%) remained unchanged. Meanwhile, the cost of business-oriented machinery (1.1% vs. 0.7%), electrical machinery (5.6% vs. 5.5%), and transportation equipment (4.7% vs. 4.6%) rose faster, with the producer price index falling 0.4% after being flat in January %, the first drop since November 2020.   LOOKING AHEAD: Today, investors should watch out for the following important data: - USD: Fed Announcement. - JPY: BSI Manufacturing Index. - NZD: Visitor Arrivals m/m. - GBP: MPC Member Dhingra Speaks. - EUR: Eurogroup Meetings.   KEY EQUITY & BOND MARKET DRIVERS: Кey factors in the stock and bond market are currently: - FR: French 10-year OAT yields fell below 3%, retreating sharply from an 11-year high of 3.24% hit on March 6, as concerns about the financial stability of U.S. banks eased bets on more aggressive tightening by the Fed this month. Meanwhile, the European Central Bank is widely expected to raise its key interest rate by 50 basis points at its upcoming meeting to extend its fight against inflation. Hawkish calls from euro zone policymakers have reinforced speculation that the ECB deposit rate could peak at 3.75% early in the third quarter. On the fiscal front, the French Senate voted to raise the mandatory retirement age by two years to 64, defying strong opposition from trade unions. - IT: Italy’s 10-year BTP yield fell below 4.3% in March, its lowest level over three weeks. The rebound in global bond demand was tracked after jitters in the U.S. banking sector drove investors to reconsider bets the Federal Reserve would raise interest rates more aggressively this month. Meanwhile, the ECB is widely expected to increase interest rates by 50 basis points at its next meeting, expanding its efforts to fight inflation. In addition, hawkish calls from eurozone policymakers have fueled expectations that the ECB's deposit rate could hit 3.75% early in the third quarter. On the fiscal front, the Italian government's 2022 budget deficit exceeded the government's target by 2.4 percentage points at 8%, as accounting changes prompted the early booking of pandemic tax cuts. Still, the 10-year BTP-Bund spread narrowed below 180 basis points, close to a nine-month low of 170 basis points in February. - UK: U.K. 10-year gilt yields held at a two-week low of 3.7% as investors sought safety amid worries about the U.S. banking system and uncertainty over U.S. monetary policy. Tech lender SVB Financial Group tried to reassure its venture capital clients that their money was safe after raising money, prompting a sell-off in bank shares worldwide on Thursday. The latest labor data presented a mixed picture as Fed officials debated how long to keep rates on hold to curb inflation. The February employment report showed that the U.S. economy added more jobs than expected, wage growth was slightly weaker than expected, and the unemployment rate rose from a 50-year low in January. However, earlier last week, data showed that jobless claims hit a new high in over two months, and job creation fell less than expected. - CA: Canada's 10-year government bond yield fell to around 3.1%, a level not seen in a month, tracking losses in its U.S. peers as investors reassessed monetary policy and growth prospects. Lingering concerns about a Fed-induced recession and the health of the U.S. banking sector have stoked demand for safe-haven assets, mainly government bonds. Domestically, the Bank of Canada said it would keep its key interest rate unchanged at current levels if the Canadian economy develops as expected. At its March meeting, the central bank paused its 4.5% rate hike cycle and, as previously implied, raised rates by 425 basis points over the past eight trading days. Policymakers pointed to weaker-than-expected GDP growth in the fourth quarter of 2022, emphasizing the need to support growth. - GE: German 10-year government bond yields held at a two-week low of 2.5%, as investors turned to safety amid uncertainty over U.S. monetary policy and concerns about the U.S. banking system following a capital raise by Silicon Valley Bank. Meanwhile, investors digested the latest U.S. jobs report, which showed wages rose faster in February while wages rose slightly less than expected, and the unemployment rate rose from a 50-year high. In addition, data on the exceeded day showed w weekly jobless claims rose to the highest level in more than two months, pointing to a cooling U.S. labor market and prompting lower interest rate expectations. - US: The 10-year U.S. Treasury yield fell below 3.7% on Friday, the lowest in a month, as investors digested a batch of labor market data for February. The number of non-agricultural employment in the current period totaled 311,000, much higher than the market forecast of 205,000. Other top data last week confirmed continued tightness in the U.S. labor market. Still, the unemployment rate rose by 0.2 percentage points while labor incomes moderated, suggesting the job market may be starting to feel the effects of the Fed's aggressive rate hikes. Bond yields held on to their previous session's slide after SVB Financial Group sold debt securities to meet deposit needs, raising concerns that the Federal Reserve may be forced to ease tightening policy. Money markets are now leaning towards the possibility of a 25 basis point rate hike at this month's Fed meeting. - US: Stock futures contracts tied to the S&P 500 and Nasdaq rose 0.4% and 0.9%, respectively, while the Dow switched between modest gains and losses as investors digested the latest jobs data. A closely watched jobs report from the Labor Department showed U.S. employers hired more workers than expected in February, with nonfarm payrolls rising by 311,000 last month. Still, the same report showed the unemployment rate unexpectedly rose to 3.6% last month while wage growth slowed, alleviating some concerns that a still-tight labor market would lead to a sharp hike in interest rates. In addition, investors were rattled by fears of the banking sector's health after U.S. tech lender SVB Financial Group launched a share sale to shore up its balance sheet amid losses on bond sales. As of Thursday's close, all three major indexes were on track to end the week down at least 3%.   LEADING MARKET SECTORS: - Strong sectors: -- - Weak sectors: Materials, Utilities, Real Estate, Industrials, Financials, Information Technology.   TOP EXPECTATIONS MARKET DRIVERS:  Кey factors in the currency and commodities market are currently: - EUR: As investors weighed U.S. jobs data, the euro climbed back above $1.06 after touching $1.05 on March 8, its lowest level since Jan. 6. The latest jobs report showed that the U.S. economy added 311,000 jobs in February, easily beating market expectations for 205,000, while wage growth that exceeds expectations and the unemployment rate unexpectedly rose to 3.6%. The euro fell sharply against the dollar earlier in the week after Federal Reserve Chairman Jerome Powell told U.S. law the akers the central bank could raise rates more than expected, but expectations for a rate hike eased after the NFP release. ease. Meanwhile, some policymakers at the ECB last week, with board member Robert HolzmanIn addition, detailing four 50 basis point rate hikes, President Christine Lagarde said in March that A 50 percentage point hike is "very, very likely." - USD: On Friday, the dollar index fell more thamight% to around 104 as investors digested the labor market report. The. In contrast, the economy added more than expected 311,000 jobs in February, but the unemployment rate unexpectedly rose to 3.6%, while wage growth slowed. The dollar hit an m than three-month high earlier last week after Fed Chairman Jerome Powell told Congress that interest rates could end up higher than expected, given strong economic data, and that the central bank would be prepared to tighten the pace fastdirectecessary 105.5. However, the demand for higher interest rates eased everywhere after the release of the NFP. Markets are now pricing in a 50/50 chance that the Fed will raise rates by 25 or 50 basis points this month, compared with a higher-than-average chance of a 50-basis point hike earlier. Traders now await next week's U.S. CPI report. - GAS: Dutch first-month futures rose 21% to 52.86 euros per megawatt-hour on Friday, the biggest jump since June and the highest level in nearly a month, pushing the weekly gain to 17.5%, amid worries about the impact of the closures of LNG terminals in France. Four LNG terminals have been shut down since late Monday due to protests against pension reform in France, and the disruptions could continue until March 14. Meanwhile, storage withdrawals set their record for the entire withdrawal season, helping to offset the impact of the shutdown in the country. Additionally, some cargo was diverted to the Netherlands and Great Britain. European gas storage tanks are 57% full, with Germany reporting a level of 65% and France at 35%. On the weather front, a cold spell in Northern Europe could persist well into next week. - OIL: Brent crude futures rose more than 1% to above $82 a barrel on Friday, looking poised to take a three-day drop as a sharp dollar depreciation following the payroll report made the commodity priced attractively. of the greenback. However, the international benchmark remained down nearly 4% last week on lingering concerns that more aggressive tightening by the Federal Reserve could dent economic growth and curb demand. OPEC Secretary-General Haitham Al-Ghais echoed those concerns, saying that declining oil consumption in the US and Europe could threaten the market. Elsewhere, investors continued to assess the demand outlook in China, as the world's top crude importer dismantled strict Covid constraints but set a modest growth target for this year. - WTI: WTI crude futures rose more than 1% to around $77 a barrel on Friday, looking poised to take a three-day drop as a sharp dollar depreciation following the payroll report made the commodity priced attractively. of the greenback. However, the US benchmark remained down nearly 4% last week on lingering concerns that more aggressive tightening by the Federal Reserve could dent economic growth and curb demand. OPEC Secretary-General Haitham Al-Ghais echoed those concerns, saying that declining oil consumption in the US and Europe could threaten the market. Elsewhere, investors continued to assess the demand outlook in China, as the world's top crude importer dismantled strict Covid constraints but set a modest growth target for this year. - GLD: Gold prices rose nearly 2% to above $1860 an ounce on Friday after payroll reports sent the dollar lower. The US economy added 311,000 jobs in February, much more than expected, but the unemployment rate rose to 3.6%, and wage growth slowed, easing expectations about the need for higher interest rates. Traders now appear to be equally divided on whether the Fed will opt for a 25 or 50 basis point hike on March 22. Meanwhile, aggressive comments from ECB policymakers point to further increases in borrowing costs. In Canada, the central bank has already suspended its tightening cycle, and the Bank of Japan has maintained its extremely accommodative monetary policy as expected. - LIT: Lithium carbonate prices in China fell to a nearly 14-month low of CNY 337,500 per tonne in March, losing 44% of their value over the past four months, driven by falling demand expectations and signs of a strong offer. After subsidizing battery makers and giving cash rewards for purchasing new electric vehicles, the Chinese government ended subsidies for the new energy car sector in January. It catalyzed a decline in demand for battery inputs from some car manufacturers. Overproducing batteries in late 2022 to take advantage of subsidies has led major battery maker CATL to sell products at a steep discount this year. The company expects carbonate prices to halve in the coming months. Meanwhile, Australia's top producer has projected global production of lithium carbonate equivalent to reach 915,000 tonnes in 2023, a 32% increase over its 2022 estimate—tons of lithium. As a result, this equals 10% of the world reserve.   CHART OF THE DAY: Sterling continued to rise above $1.20, moving further away from a more than three-month low of $1.18 hit on March 8, as investors weighed mixed economic data from the U.K. and the U.S. against a hawkish Federal Reserve. Data showed that the UK economy grew by more than expected 0.3% in January despite a contraction in the manufacturing sector. In the U.S., employment data showed stronger-than-expected job growth in February, while wage growth was slightly weaker than expected. Data on Thursday showed weekly jobless claims unexpectedly jumped to a new two-month high. On the monetary policy front, Federal Reserve Chairman Jerome Powell said the central bank may need to raise interest rates more than expected to fight inflation, while the Bank of England is expected to end its current tightening cycle after its March meeting. Investors are now awaiting UK employment and wages data due on Tuesday and Chancellor Jeremy Hunt's new budget on Wednesday.       Long-term Channels Trading Strategy: - GPBUSD -; Chart with time-frame (D1); The primary Resistance with a potential (consolidation area) is around ~ ( 1.221 ),  and the primary Support with a potential (consolidation area) is around ~ ( 1.189 ).  Therefore, the next most probable price movement is a (sideways) trend. *see details on the chart.