Asian Markets Drop As US Seeks Ways To Toughen Restrictions On Tech Exports
Asian stock markets fell on Tuesday morning as a report by Bloomberg mentioned that the US administration seeks ways to toughen restrictions on the export of semiconductor technology to China. Chinese authorities said that this type of plan could backfire.
Commenting on the tariffs against Mexico and Canada, US President Donald Trump said that “the tariffs are going forward on time, on schedule.”
The result of Germany’s parliamentary elections remains a topic of conversation across global markets as investors and traders believe that the country’s economy could make a turnaround. Deutsche Bank’s head, Christian Sewing, urged the next government to proceed with fundamental reforms as the German economy lags its counterparts.
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Ifo Report Shows German Business Morale Stagnant
A report released by the Ifo institute in Germany showed that the business morale index remained unchanged at 85.2 points, weaker than the 85.8 forecast by market analysts. The Ifo survey revealed that business expectations came in at 85.4 versus 85.0 expected, signaling a slight surge of optimism about the economic outlook.
ING economists will be waiting for the negotiations between the top political parties. According to their note published on Monday, “Germany’s most prominent leading indicator, the Ifo index, just signaled that the next government cannot count on any cyclical tailwind, yet. Coming in at 85.2 in February, from 85.1 in January, the Ifo index suggests that the German economy is still in stagnation. The current assessment component weakened significantly (from 86.0 in January to 85.0 in February), while expectations improved somewhat. This is why all eyes will now be on the upcoming coalition talks, hoping for some breakthrough and at least a confidence boost.”
ECB’s Wunsch: “Should Not Sleepwalk To Cutting Rates”
European Central Bank (ECB) policymaker Pierre Wunsch suggested that the central bank should not “sleepwalk” to cutting rates to 2% although other council members have mentioned their will to lead interest rates lower.
Wunsch, the Governor of the National Bank of Belgium, clarified that “I’m not pleading for a pause in April. But we must not ‘sleepwalk’ to cutting rates to 2% without thinking about it.” The ECB policymaker noted that decisions should be independent and added that “the risks on the downside and upside for inflation are relatively limited.”
Wunsch suggested that “inflation in Europe might be the boring part of this year; and it's not going to be a boring year.”
BoE’s Dhingra: "Already At High Level Of Monetary Policy Restrictiveness"
Swati Dhingra, an external Monetary Policy Committee (MPC) member for the Bank of England (BoE), said that the bank has already reached a high level of monetary policy restrictiveness. Dhingra noted that her definition of gradual rate cuts “does not mean 25 basis points per quarter.”
The BoE’s policymaker suggested that “if you can cut rate by 25 basis points at a quarterly pace, you'll still be at restrictive territory all this year.” Commenting on UK inflation, she mentioned that medium-term inflation pressures are easing, adding that weak demand seems to have replaced the low supply factor.
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