US FED hike rates for the first time in 2 years
The Federal Reserve, for the first time since the beginning of the pandemic in 2020, rose interest rates to 0.25-0.5. This is amidst a time where inflation is at 40 year highs, lingering longer than what the Federal Reserve had first anticipated back in 2021.
The long awaited press conference cleared up many of the doubts and uncertainties that market participants had, leading to a strong rally across all indices into the close.
However, the impact on inflation and GDP growth due to tensions in Europe, remains mainly unknown, causing some tampering of expectations amongst the members of the Federal Reserve, as market participants continue to observe the Ukrainian crisis.
China announces support for Chinese IPOs abroad
Chinese regulators announces its support for Chinese stocks on Wednesday, evaporating fears of delisting from Non-Chinese stock exchanges.
Chinese and US regulators are reportedly working towards a cooperation plan to support Chinese stocks listed on U.S stock exchanges.
Since the news release, Chinese stocks had a significant run up, with the Hang Seng Index running up over 17.42% from its lows. Stocks such as Alibaba, also ran up over 52.48% from its lows.
Bank of England hike rates, again.
The United Kingdom was already facing running hot inflation, prior to the Ukrainian crisis. This is the first time since 2004 where the Bank of England rose rates consecutively to 0.75%.
Furthermore, it increased its forecast for inflation to peak at 7.25% in April. They cited that Moscow's attack on Ukraine put tensions on energy supply and forced inflation upwards.
Despite this 30-year high of inflation, the BoE has taken a more dovish tone, stating that the invasion of Ukraine is expected to cause inflation to run hotter, for longer, and can set a precedent on what to expect for their future policy action.
Competition to the dollar?
Will the Dollar lose its reserve currency status? That is one worry that investors are currently pricing in as China ramps up efforts to roll out its central bank digital currency.
China is currently far ahead its peers in the digital currency space, as nations look for alternative payment systems to reduce the dependence on the dollar.
This is also amidst a time where the Saudis are considering the usage of Yuan for China oil sales, rather than using the Dollar.
The loss of the reserve currency will be detrimental to the US economy, as borrowing and other costs will be slated to rise.
Oil prices plummet
Oil prices plummeted to a low of $93 this week, before recovering to the weekly close of $105.35. This increased volatility in oil is also seen in a wide variety of commodities, such as wheat.
Many market participants are hoping for a drop in oil prices, as sustained and elevated oil prices will have a measurable impact on inflation and GDP. The Federal Reserve are also hoping for oil to drop to previous levels, which will allow them to be more dovish.
However, many factors are still pushing prices up. Uncertainties about the supply of oil that can be obtained from Non-Russian sources are one of them, as investors keep a close eye on the developments on the geo-political stage
Upcoming events
Monday, 21 March
China - People's Bank of China Loan Prime Rate
Tuesday, 22 March
United States - Fed Chair Powell Speaks
Wednesday, 23 March
Singapore - CPI (YoY, February)
United Kingdom - CPI (YoY, February)
United Kingdom - Annual Budget Release
United States - Fed Chair Powell Speaks
United States - New Home Sales (February)
United States - Crude Oil Inventories
Thursday, 24 March
United Kingdom - Manufacturing / Services / Composite PMI
United States - Initial Jobless Claims
Friday, 25 March
Singapore - Industrial Production (February)
United Kingdom - Retail Sales (February)
United States - Pending Home Sales (February)
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