ASIA STOCKS: Strong Regional Rally With China Down.
A BBG report suggests that the escalating trade war is having a material impact on the money investors have placed in Chinese ETFs. Data suggests that US$3.6bn has been withdrawn in early April following the imposition of tariffs.
Alibaba and Tencent backed Zhipu has begun an initial public offering as soon as this year, angling to become the first of several prominent ChatGPT-competitors to tap public markets.
Many of Asia’s bourses rose today with the US President floating a potential tariff pause, giving autos a reprieve.
- China’s bourses were the exception today. As the Hang Seng edged higher by +0.20%, the onshore bourses drifted lower with CSI 300 down -0.07, Shanghai down -0.07 and Shenzhen down -0.48%
- The KOSPI had a very strong day today rising +1%, following on from yesterday's gain of +0.95%.
- Singapore’s FTSE Straits Times was one of the regions best performers rising +1.8%, following yesterday’s gain of +1.04%.
- Malaysia’s FTSE Bursa Malaysia KLCI is holding onto modest gains of +0.20% following yesterday's outsized rally of +1.79%.
- The Jakarta Composite is up yet again and continues to perform well, rising +1.3% today, from yesterday’s gains of +1.70%.
- India’s NIFTY 50 has risen +2.1% in early trading, following on from yesterday’s gains of +1.92%.
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FED: March Economic Projections: Higher Inflation, Weaker Growth, Same Rates
The MNI Markets Team’s expectations for the updated Economic Projections in the March SEP are below.
- The unemployment rate is likely to rise slightly for 2025 alongside a downgrade in GDP growth, while the 2025 core and headline PCE inflation projections are set to rise again. Changes to later years will likely be limited, however.
- More detail on the shift in Fed funds rate medians is in our meeting preview - we will add more color next week.
FED: Market Pricing Nearly 3 2025 Cuts As Conditions Tighten
Amid rising government policy uncertainty, sentiment among businesses and consumers has fallen sharply since the start of the year, while equities and the dollar have reversed their post-election rise. Overall, financial conditions have tightened, even if stress is not yet mounting, e.g. no major widening of credit spreads (the accompanying chart shows the Fed’s financial conditions impulse index but only through January).
- Combined with growth fears, this has affected expectations for the Fed’s rate path, with around 18bp more cuts expected in 2025 compared with what was seen after the January FOMC. 65bp of cuts are priced for the year as a whole. 2025 cut pricing reached 71bp before the February inflation data and 76bp before the February payrolls report.
- A rate cut is seen with near zero probability for March’s meeting, but the first full cut is just about priced for June, with a second nearly priced by September.
- Chair Powell has no reason to endorse or refute these expectations – he’s likely to be happy with a press conference that ends with little discernable change in pricing.
CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
- CANADA'S CARNEY ANNOUNCES ELIMINATION OF THE CONSUMER CARBON TAX
