On Wall Street, the FOMC minutes failed to provide any impetus and so the Dow Jones Industrial closed at 33'446.26 points (+0.05%) virtually unchanged from the previous day. The market-wide S&P 500 increased moderately by +0.15% to 4'079.95 points. Thus, both indices remain in the immediate vicinity of their recent record highs. The improved prospects for the US economy, also emphasized by the Fed, thanks to the dual stimulus (monetary and fiscal policy) and the success of the vaccination campaign in the US, should provide support for the equity markets. In addition, the Federal Reserve has so far remained very relaxed about the rise in yields on the bond market, which should give stock market participants additional confidence. The yield on ten-year US government bonds is currently trading at 1.66%, well below the recent highs of over 1.75%.
In Asia, stock markets are mixed. In Tokyo, the Nikkei 225 is down by around -0.5%, while in Hong Kong, the Hang Seng Index is up by +0.8%. For the stock market opening in Europe, the futures signal a friendly start.
The minutes of the latest Federal Open Market Committee (FOMC) meeting of the Federal Reserve (Fed) on March 17 confirmed the more positive assessment regarding the economic development in the United States. Expansionary monetary policy in combination with the government's stimulus packages supported the economy. Nevertheless, the Fed stressed that the pandemic still poses a high risk and that economic development is still far from the Fed's long-term targets. Thus, the Fed rules out an adjustment of its monetary policy for the time being. In view of the recent rise in yields on bond markets, the central bank remained calm.
Business sentiment in the private sector improved significantly in March, according to the latest survey results from the British research institute IHS Markit. The Purchasing Managers' Index (PMI Composite) for the service and industrial sectors climbed from 48.8 points in February to 53.2 points in March, thus clearly outperforming the 52.5 points expected by analysts on average. Pandemic-related restrictions on public life continue to weigh mainly on the service sector, but the corresponding PMI also improved significantly in March from 45.7 to 49.6 points. “The hard-hit service sector is stabilizing, and the industrial sector is booming,” commented IHS Markit chief economist Chris Williamson, adding that the euro area economy has weathered the recent lockdowns far better than many had expected.
Business sentiment in the UK also brightened in March. IHS Markit's Purchasing Managers' Index for the private sector rose by 6.8 points month-on-month to 56.4. As in the eurozone, it is positive that the situation in the services sector has improved – the corresponding PMI here at 56.3 points is even well above the growth threshold of 50 points. The PMI for the British industry rose from 55.1 to 58.9 points. IHS Markit speaks of growing optimism in the services sector, which can be observed for the first time since the beginning of the corona crisis.
The discussion initiated by US Treasury Secretary Janet Yellen on the introduction of a global minimum tax for internationally active companies is now also being taken up at the G20 level. The virtual meeting of the finance ministers and central bank heads of the 20 leading economic nations will focus primarily on combating the corona pandemic, but the topic of global corporate tax reform is also likely to be high on the agenda. Discussions will focus on a minimum tax for internationally active corporations on the one hand and a digital tax on the other, which would force Internet giants such as Apple, Google and Amazon to pay their taxes not only at their headquarters but also in the countries where they generate their sales.
|08:00||GE||Industrial Orders (February, m/m)||+1.4%|
|11:00||EZ||Producer Prices (February, y/y)||+1.4%|
|13:30||EZ||ECB Minutes (from March 11)|
|14:30||US||Iniatial Jobless Claims (weekly)||719,000|
|18:00||US||Fed Governor Jerome Powell Speech|
|SZ||Ems Chemie||Q1 Sales|
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Source: LGT Bank (Switzerland) Ltd.
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