Portfolio Update – March 2024

General news

• On 01/03/2024, Meta announced on Thursday that it will discontinue its dedicated section for news articles on Facebook in the United States and Australia starting in April. The decision is part of Meta’s ongoing effort to prioritize investments in products and services that users value the most, particularly short-form video content. The move comes as the usage of Facebook News in Australia and the U.S. dropped by over 80% last year. This decision follows Meta’s previous move to eliminate the news section for users in the U.K., France, and Germany. Meta aims to focus on short-form video content, such as Reels, amid competition from platforms like TikTok. Despite removing the Facebook News tab, users can still access news articles through links on the core Facebook app, and publishers can continue to post links to their stories on their Facebook accounts and Pages. Meta clarified that existing agreements with publishers in Australia, France, and Germany will remain unaffected, but it will not enter into new commercial deals for traditional news content in these countries or offer new Facebook products specifically for news publishers in the future.
• On 02/03/2024, In February, inflation in the eurozone, consisting of 20 nations, eased to 2.6%, slightly higher than expected by economists who forecasted a 2.5% reading. Core inflation, which excludes volatile components like energy, food, alcohol, and tobacco, was 3.1%, surpassing the anticipated 2.9%. The highest inflation rates were recorded for food, alcohol, and tobacco at 4%, followed by services at 3.9%. Energy prices, which surged due to Russia’s invasion of Ukraine last year, continued to decline, with the deflation rate improving from -6.1% to -3.7%. While the headline inflation rate had previously been 2.8% in January, it was expected to ease further after price increases slowed in Germany, France, and Spain. Investors are closely monitoring for signals on when the European Central Bank (ECB) might reduce interest rates, with market expectations pointing to a possible cut in June. However, ECB officials emphasize the need to conclude spring wage negotiations to better understand domestic inflationary pressures. The February inflation figures present a mixed picture for policymakers, as core inflation remains above 3% while the headline rate moves closer to the ECB’s 2% target. Nonetheless, price increases have significantly cooled from their peak of 10.6% in October 2022
• U.S. crude oil futures surged to $80 per barrel, their highest level in almost four months, amid indications of a tightening market ahead of an imminent OPEC+ decision on production cuts. The April West Texas Intermediate (WTI) contract closed at $79.97 a barrel, while May Brent futures settled at $83.94 a barrel. Reports suggest that OPEC+ is contemplating extending production cuts through the second quarter, with a potential extension until year-end, which could be decided during the group’s next meeting in early March. Analysts at Bank of America anticipate Brent crude futures reaching $95 per barrel in the second quarter, but emphasize the significance of the benchmark holding above the $80 level in March to avoid a drop to the $73-$75 range.
• On 04/03/2024, Oil prices experienced a slight dip on Monday following OPEC+’s decision to extend voluntary output reductions until the second quarter, aiming to stabilize crude markets in the short term. Global benchmark Brent fell by 0.05% to $83.52 a barrel, while U.S. West Texas Intermediate futures decreased by 0.19% to $79.82 per barrel. OPEC+ members, including Saudi Arabia and Russia, agreed to continue their planned production cuts, with Saudi Arabia committing to a voluntary reduction of 1 million barrels per day until the end of June, maintaining crude production at around 9 million barrels per day. Russia also pledged to cut its production and export supplies by a combined 471,000 barrels per day until the end of the second quarter. Other key producers such as Iraq and the UAE will extend their voluntary production cuts until the same period. Analysts note that this decision underscores OPEC+’s unity and determination to support oil prices above $80 per barrel, signaling potential concerns about demand prospects in the second quarter.
• On 05/03/2024, Gold futures reached a historic high on Monday, settling at $2,126.30 per ounce for the April contract, marking the highest level since its creation in 1974. This follows a consecutive record-setting session, with Friday’s closing at an all-time high of $2,095.70. The VanEck Gold Miners ETF (GDX) also saw gains, closing up 4.3% for its third consecutive day of increases, trading above the 50-day moving average for the first time since January. Peter Boockvar, Chief Investment Officer at Bleakley Financial Group, highlighted that gold’s inflation-adjusted record reached around $3,200 in 1980, suggesting further potential upside. Boockvar attributed gold’s strong performance amidst high interest rates and a robust dollar to central banks buying significant amounts of gold following Russia’s foreign exchange reserves confiscation by the US and EU post-Ukraine invasion. This trend, coupled with expectations of Fed interest rate cuts amid declining inflation, is seen as driving gold prices higher, traditionally considered a safe haven asset when interest rates decrease. Bart Melek, Global Head of Commodity Strategy at TD Securities, noted that gold’s rise was supported by weaker-than-expected economic data, particularly in the manufacturing sector, last week.
• On 07/03/2024, Federal Reserve Chair Jerome Powell reiterated on Wednesday that he anticipates interest rates to start declining this year but refrained from specifying a timeline. Speaking before the House Financial Services Committee, Powell emphasized the need to carefully assess incoming data and the evolving economic outlook before making any adjustments to the policy rate. While acknowledging the strength of the economy and labor market, he stressed the importance of proceeding cautiously to avoid undermining progress against inflation. Powell’s remarks, echoing the Federal Open Market Committee’s statement from its recent meeting, indicated that while rate reductions are expected, the timing hinges on achieving greater confidence in sustained inflation movement towards the 2 percent target. While the speech didn’t introduce new policy directions, it underscored the Fed’s commitment to data-driven decision-making amid economic uncertainty.
• The heads of China’s central bank and economic planning agency indicated a willingness to support growth through measures like potential further cuts to banks’ reserve requirements, as mentioned by Pan Gongsheng, governor of the People’s Bank of China, during a press conference. However, there were no announcements of large-scale stimulus plans. The leaders defended China’s growth target of around 5% for the year and outlined plans to address various economic challenges, including a real estate slump and weak consumer demand, as highlighted in Premier Li Qiang’s recent government work report. Despite expectations for additional stimulus measures, the report’s contents left analysts questioning how China would achieve its growth target for the year.
• On 08/03/2024, Federal Reserve Chair Jerome Powell hinted at potential interest rate cuts in the near future if inflation signals align, indicating that the central bank is waiting to gain more confidence that inflation is sustainably moving towards its 2% target. Powell’s remarks to the Senate Banking Committee emphasized the importance of avoiding recession while normalizing policy as the economy returns to normal. Market expectations on Fed policy have shifted, with the outlook now for the first rate cut to come in June and a total of four reductions totaling a full percentage point by the end of 2024. While inflation data has shown signs of slowing, Powell stressed that the Fed is monitoring the situation closely but is not yet ready to implement rate cuts, indicating satisfaction with the current policy stance.
• Sweden officially became the 32nd member of NATO on Thursday, nearly two years after initially applying for membership. The decision was confirmed after an extraordinary meeting where all current NATO members approved Sweden’s accession. NATO Secretary-General Jens Stoltenberg welcomed Sweden, stating that its membership strengthens NATO and enhances security for both Sweden and the entire Alliance. Swedish Prime Minister Ulf Kristersson traveled to Washington, D.C., to finalize the documents, marking a significant shift from Sweden’s longstanding policy of military nonalignment. The decision to join NATO was prompted by Russia’s invasion of Ukraine, with Finland also becoming a member last April for similar reasons. Despite delays from some NATO members like Hungary and Turkey, all existing members ultimately approved Sweden’s accession.
• On 09/03/2024, In February, nonfarm payrolls in the U.S. increased by 275,000 jobs, surpassing economists’ expectations of 198,000, according to the Labor Department’s Bureau of Labor Statistics. However, the unemployment rate also rose to 3.9%. January’s job growth was revised down to 229,000 from the initially reported 353,000, and December’s figures were revised down to 290,000 from 333,000. Despite the increase in the jobless rate, the labor force participation rate remained steady at 62.5%, with the “prime age” rate edging up to 83.5%. Average hourly earnings rose by 0.1% for the month, slightly below expectations, and were up 4.3% from a year ago, slightly below the previous month’s gain of 4.5%. The average workweek increased to 34.3 hours, rebounding from a slip in January.
• On 11/03/2024, President Joe Biden signed a $460 billion spending bill into law, preventing a partial government shutdown over the weekend. The bill covers funding for six major government areas and marks progress towards securing a permanent budget plan for the fiscal year. Passed with a Senate vote of 75 to 22 following earlier approval in the House, this marks the fourth short-term spending bill to avert a shutdown this fiscal year. Democrats emphasized funding for food assistance programs and infrastructure employee pay, while Republicans highlighted victories related to veterans’ gun ownership and funding cuts to government agencies.
• On 12/03/2024, Reuters reported that a Federal Reserve facility, the Bank Term Funding Program (BTFP), which was hastily launched a year ago amid the collapse of Silicon Valley Bank, will close for new business on Monday. The program, initiated amid fears of a potential systemwide bank run, stabilized deposits and contributed to overall growth in bank loan books, preventing significant bank failures and allowing the Fed to maintain its monetary policy stance. While the BTFP’s success is acknowledged, questions arise about the Fed’s response to future banking crises, with attention turning to the discount window as a potential lender of last resort. The BTFP addressed liquidity issues following SVB’s collapse, offering loans on eligible collateral at favorable terms, which led to increased borrowing despite the crisis abating.
• During her official visit to Manila on Monday, U.S. Commerce Secretary Gina Raimondo announced that American companies are poised to invest over $1 billion in the Philippines. This investment, part of a two-day trade and investment mission, involves 22 companies including United Airlines, Google, Visa, KKR Asia Pacific, and Microsoft. The investments will focus on areas such as solar energy, electric vehicles, and digitization. Raimondo’s visit highlights efforts to deepen economic ties between the two countries, which coincide with increased cooperation in defense amid concerns over China’s actions in the South China Sea and near Taiwan. Raimondo emphasized the United States’ commitment to expanding trade and investment in the Philippines and the broader Indo-Pacific region, emphasizing the importance of protecting advanced technology from Chinese access. She reaffirmed the strong alliance between the United States and the Philippines, highlighting their 73-year-old mutual defense treaty. Following her visit to Manila, Raimondo will travel to Thailand to explore opportunities for strengthening cooperation in manufacturing and supply chain resilience.
• On 13/03/2024, Inflation in February saw the consumer price index (CPI) rise by 0.4% for the month and 3.2% from a year ago, according to the Labor Department’s Bureau of Labor Statistics. The monthly increase met expectations, but the annual rate slightly exceeded forecasts. Excluding volatile food and energy prices, the core CPI also rose by 0.4% for the month and 3.8% from a year ago, both slightly higher than expected. Energy costs, up by 2.3%, contributed to the headline inflation number, while food costs remained flat for the month and shelter rose by 0.4%. The BLS noted that energy and shelter increases accounted for over 60% of the total gain, with gasoline prices rising by 3.8% and owners’ equivalent rent climbing by 0.4%. Despite inflation remaining above the Fed’s 2% goal, particularly due to shelter costs, experts suggest that the current inflationary trend is unlikely to prompt the Fed to lower rates quickly, especially with home prices expected to continue rising this year and rents decreasing slowly.
• The Office for National Statistics reported that U.K. gross domestic product (GDP) grew by 0.2% in January, matching economists’ forecasts. This follows a 0.1% contraction in December, with the U.K. economy having entered a shallow recession in the second half of last year. Construction output saw an unexpected jump of 1.1% in January, while services recorded 0.1% growth. However, production output fell by 0.2%. Jack Meaning, chief U.K. economist at Barclays, noted that while the figures are not overly positive, they show improvement compared to the end of last year, particularly in the industrial and manufacturing sectors. The British pound remained stable against the U.S. dollar and the euro following the release.
• On 14/03/2024, The House passed a bill on Wednesday, with a vote of 352-65, requiring China tech giant ByteDance to divest TikTok or risk the app being banned in the U.S. Introduced by Reps. Mike Gallagher and Raja Krishnamoorthi, the legislation, named the Protecting Americans from Foreign Adversary Controlled Applications Act, highlights TikTok as a national security threat due to foreign control. The bill now moves to the Senate, where its fate is uncertain. TikTok criticized the process as secretive and urged the Senate to consider the impact on the economy and its users. TikTok CEO Shou Zi Chew expressed disappointment in a video, stating the bill would benefit other social media companies and harm creators and businesses. President Biden has indicated he would sign the bill if it reaches his desk, with the White House providing technical support in its crafting.
• On 15/03/2024, In February, wholesale prices surged unexpectedly, adding to concerns about inflation in the U.S. economy. The producer price index (PPI) rose by 0.6% on the month, exceeding the forecast of 0.3%, with the core PPI, excluding food and energy, accelerating by 0.3%. On a year-over-year basis, the headline index increased by 1.6%, the largest jump since September 2023. This data contributed to a slight decline in major U.S. stock markets, while Treasury yields rose. Additionally, retail sales rebounded by 0.6%, reversing a previous slump, and initial jobless claims nudged lower to 209,000. The PPI release follows recent data showing higher-than-expected inflation in the consumer price index (CPI), underscoring the significance of wholesale prices as a leading indicator for inflation. The surge in the PPI was mainly driven by a 1.2% increase in goods prices, particularly in energy, with gasoline prices soaring by 6.8%. Services costs also rose, buoyed by a surge in traveler accommodation services.
• On 16/03/2024, Turkey’s central bank has shifted its monetary tightening approach amid rising inflation, instructing lenders to place parts of their required lira reserves into blocked accounts effective Friday. This move has led to higher loan rates and reduced loan limits for some banks, with concerns arising over liquidity constraints. Economists warn that the methodology of such tightening measures is crucial for managing market expectations effectively. Turkish bank stocks dipped in response to the news, with analysts noting that the central bank’s actions represent another tightening step. Despite indications from the central bank that its rate-hiking cycle was over, concerns persist over inflation, with annual consumer price inflation reaching 67.07% in February. Capital Economics suggests that further tightening measures may be necessary, especially ahead of local elections, as capital inflows slow and foreign exchange reserves decline.
• On 18/03/2024, Turkey’s central bank has adopted a different approach to monetary tightening in response to escalating inflation, issuing a directive to lenders to place portions of their required lira reserves into blocked accounts. This move has raised loan rates and reduced loan sizes for some banks, prompting concerns about liquidity constraints. Analysts emphasize the importance of the methodology in managing market expectations effectively amid these tightening measures. Turkish bank stocks declined following the announcement, with observers noting that the central bank has taken “another tightening step via reserve requirements.” Capital Economics highlights recent measures targeting lira loan growth and warns of potential further tightening in light of declining reserves and soaring consumer price inflation, which reached 67.07% in February. With pressures mounting ahead of local elections and capital inflows slowing, the central bank may face the need for additional tightening measures in the second quarter.
• In February, new bank lending in China fell more than expected, with Chinese banks extending 1.45 trillion yuan ($201.5 billion) in new yuan loans, down sharply from January’s record high and below analysts’ expectations. Outstanding yuan loans grew 10.1% from a year earlier, the lowest on record, compared to 10.4% growth in January. This pullback was anticipated, as banks typically front-load loans at the beginning of the year. The timing of the Lunar New Year holiday may have also impacted lending activity. Analysts had predicted new yuan loans to fall to 1.50 trillion yuan, showing limited high-quality borrowing demand despite recent cuts in the required reserve ratio by the People’s Bank of China (PBOC). Household loans, mainly mortgages, contracted by 590.7 billion yuan in February, while corporate loans fell to 1.57 trillion yuan.
• On 19/03/2024, Japan’s central bank announced on Tuesday the first interest rate hike since 2007, signaling the end of the world’s only negative rates regime. The Bank of Japan (BOJ) cited robust wage gains as a factor behind the decision. However, the BOJ emphasized that it does not plan aggressive rate hikes, stating it expects accommodative financial conditions to persist due to the fragile economic growth in Japan. The BOJ raised short-term interest rates to around 0% to 0.1% from -0.1%, discontinuing the negative rates policy in place since 2016. Additionally, the BOJ abolished its radical yield curve control policy for Japanese sovereign bonds, but will continue purchasing government bonds at a similar rate of about 6 trillion yen per month. The central bank also mentioned readiness for “nimble responses” such as increased bond purchases in case of a rapid rise in long-term interest rates.
• China has tightened regulations on consumer finance companies by increasing the capital requirements for non-bank financial firms providing small personal loans. The new rules, announced by the National Financial Regulatory Administration, will take effect on April 18, aiming to strengthen oversight in the financial sector. According to the regulations, consumer finance firms eligible to offer loans, excluding those for home and car purchases, must now have a minimum registered capital of 1 billion yuan ($139 million), triple the previous requirement. Main investors in these firms must hold a stake of at least 50%, and financial institutions acting as main investors need to have total assets of at least 500 billion yuan ($69.45 billion) by the end of the most recent fiscal year. Additionally, non-financial institutions serving as major investors must demonstrate operating incomes of at least 60 billion yuan ($8.3 billion) in the most recent fiscal year. These measures reflect China’s efforts to curb the rapid growth of non-bank debt and strengthen its financial system amid slowing economic growth.
• The Reserve Bank of Australia (RBA) has decided to maintain the interest rate at 4.35 per cent for the third consecutive time, signaling no immediate relief for struggling mortgage holders. Despite speculation in financial markets about a potential rate cut in September, RBA Governor Michele Bullock emphasized that the bank is not ruling anything in or out, suggesting a cautious approach to monetary policy. With inflation currently at 4.1 per cent, well above the RBA’s target range of two to three per cent, the prospect of a rate hike remains. While there are signs of moderation in inflation, the economic outlook remains uncertain, according to Ms. Bullock. The RBA continues to prioritize returning inflation to its target range, stating that it will take some time before inflation reaches sustainable levels. The next inflation data, for the first quarter of 2024, will be released in April, preceding the RBA’s next board meeting on May 7.
• On 20/03/2024, UK inflation unexpectedly decreased to 3.4% year-on-year in February, down from 4% in January, according to official figures released Wednesday. The month-on-month consumer price index rose by 0.6%, rebounding from a negative reading in January. Economists had anticipated a higher annual rate of 3.5% and a monthly rate of 0.7%. The Office for National Statistics attributed the decrease to lower contributions from food, restaurants, and cafes, while housing and fuel exerted upward pressure on prices. Food and non-alcoholic beverage prices rose by 5% annually in February, the lowest rate since January 2022. Core CPI, excluding volatile items, stood at 4.5% annually, below expectations and down from 5.1% in January. UK Finance Minister Jeremy Hunt noted that falling inflation bodes well for the economy. The Bank of England is expected to maintain its interest rate at 5.25% in its upcoming meeting, as it assesses the timing for potential cuts amid inflationary pressures.
• Japan’s central bank, the Bank of Japan (BOJ), made the decision to end its experiment with negative interest rates and unconventional easing tools aimed at revitalizing the nation’s economy. This move followed robust wage negotiations between Japan Inc. and unionized employees, resulting in a provisional weighted average 3.7% increase in base pay, surpassing last year’s gains. BOJ Governor Kazuo Ueda had highlighted the significance of these talks in informing any potential rate hike, expecting higher salaries to drive domestic demand and inflation. Despite exceeding its 2% inflation target for over a year, the BOJ maintained its ultra-loose monetary policy, attributing price increases mainly to imported factors. With the transition, the BOJ will now prioritize utilizing a short-term interest rate as its primary policy tool, setting it at 0.1% for financial institutions’ current account balances held at the central bank, effectively raising interest rates from the previous -0.1%.
• The Government Pension Investment Fund (GPIF) of Japan, the world’s largest pension fund by assets under management, announced its interest in exploring potential new investments by requesting information on “illiquidity assets,” including bitcoin. GPIF currently allocates funds to various assets such as domestic and foreign bonds, stocks, real estate, infrastructure, and private equity. However, it is now seeking basic information on other assets like forests, farmland, gold, and bitcoin to evaluate their potential incorporation into its investment portfolio. While there is no indication of an immediate investment in bitcoin or cryptocurrencies, GPIF’s move follows bitcoin’s recent surge to an all-time high and its significant rally over the past year, partly fueled by the introduction of bitcoin exchange-traded funds in the U.S. Despite the interest, pension funds have traditionally been cautious about cryptocurrency investments due to their volatile nature, although some, like South Korea’s National Pension Service, have cautiously entered the space. In Japan, the government has proposed legislation to allow investment funds to hold digital assets like cryptocurrencies, signaling a potential shift in regulatory stance towards crypto investments.
• On 21/03/2024, The rally in gold prices reached new heights on Thursday, hitting an all-time high as central banks continue to amass bullion at record levels. Aakash Doshi, Citi’s North America head of commodities research, anticipates gold prices could climb to $2,300 per ounce in the latter half of 2024, particularly with expectations of potential rate cuts by the U.S. Federal Reserve during that period. Gold’s allure typically strengthens as interest rates decline, offering a hedge against lower returns from fixed-income assets like bonds in a low-rate environment. Macquarie also projects further highs for gold in the second half of the year, attributing recent price spikes to significant futures buying, despite high interest rates and a robust dollar. Shaokai Fan, Global Head of Central Banks at the World Gold Council, noted that central banks’ substantial gold purchases in recent years have buoyed prices, underscoring gold’s appeal as a safe-haven asset amidst geopolitical uncertainties. While Russia and China have been major buyers over the past decade, central bank acquisitions in recent years have diversified, as highlighted by Doshi.
• The Federal Reserve, in its Wednesday policy meeting, opted to maintain interest rates as expected, keeping the benchmark overnight borrowing rate within the range of 5.25%-5.5%, consistent since July 2023. Anticipating multiple cuts before the year’s end, the Fed signaled three quarter-percentage point reductions by 2024’s conclusion, the first since the early days of the Covid pandemic. This decision, reflected in the Fed’s “dot plot” projections, lacked specific timing indications but Chair Jerome Powell affirmed the expectation for cuts pending favorable economic data. Futures markets post-meeting implied a high likelihood of the first cut occurring in June. Powell underscored the possibility of policy restraint easing later in the year, aligning with the gradual reduction outlined in the dot plot. The committee envisions additional cuts in subsequent years, aiming for a settled federal funds rate around 2.6%, approximating the neutral rate.
• On 22/03/2024, Reddit shares surged 48% in their debut on Thursday, marking the first major initial public offering (IPO) for a social media company since Pinterest entered the market in 2019. The 19-year-old platform, known for hosting diverse online forums, priced its IPO at $34 per share, the top end of the expected range, raising about $750 million with a market cap of approximately $9.5 billion. Trading under the ticker symbol “RDDT,” Reddit’s IPO signifies a test of investor appetite for new tech stocks amid a drought in IPOs since the peak of the technology boom in late 2021. Despite a private market valuation of $10 billion in 2021, Reddit’s IPO valuation reflects changes in market sentiment, with a focus on profit over growth. While Reddit’s annual sales for 2023 rose to $804 million, it recorded a net loss of $90.8 million, indicating investor scrutiny over its path to profitability. The IPO market excitement extends beyond Reddit, with Astera Labs, a data center hardware company, also witnessing a soaring debut, underscoring investor enthusiasm for businesses tied to emerging technologies like artificial intelligence.
•  The Department of Justice launched a lawsuit against Apple, alleging that its iPhone ecosystem constitutes a monopoly that has led to its “astronomical valuation” at the expense of consumers, developers, and competitors. The government’s legal action raises the possibility of breaking up one of the world’s largest companies, with structural relief being considered as an option if successful. The lawsuit accuses Apple of anti-competitive behavior extending beyond the iPhone and Apple Watch businesses, encompassing aspects like advertising, browser, FaceTime, and news offerings. Apple’s shares dropped over 4% in response to the news, and if a breakup were to occur, it would be one of the few under the Sherman Act since the Bell System’s breakup in 1982. The DOJ alleges that Apple’s actions aimed at maintaining iPhone sales included blocking cross-platform messaging apps, limiting compatibility with third-party wallets and smartwatches, and disrupting non-App Store programs and cloud streaming services. This legal challenge poses a significant threat to Apple’s business model, potentially impacting its iPhone, Apple Watch, and services segments, which collectively generate billions in revenue annually.
• The Swiss National Bank (SNB) surprised markets by lowering its main policy rate by 0.25 percentage points to 1.5%, citing expectations of persistently low inflation below 2%. Despite economist forecasts expecting rates to be held at 1.75%, the SNB highlighted that inflation had remained below the 2% threshold, with Swiss inflation hitting 1.2% in February. The bank also revised down its annual inflation forecasts, projecting average inflation of 1.4% in 2024 and 1.2% in 2025, lower than previous estimates. Capital Economics anticipates two more rate cuts this year, attributing them to a dovish tone from the SNB and expectations of undershooting inflation. The September meeting, likely the last under Chairman Thomas Jordan’s leadership, is expected to see further rate adjustments amidst modest economic growth forecasts and uncertainties, particularly concerning global economic activity and real estate markets.
• Turkey’s central bank increased its key interest rate, the one-week repurchase rate, from 45% to 50%, citing the ongoing necessity to combat rising inflation. The Monetary Policy Committee highlighted that February saw higher-than-expected monthly inflation, particularly driven by services inflation, while imports of consumption goods and gold slowed, improving the current account balance. Despite this, domestic demand remained resilient. The committee underscored the persistence of inflation pressures due to stickiness in services inflation, inflation expectations, geopolitical risks, and food prices. With Turkish annual consumer price inflation reaching 67% in February, concerns arose about the central bank’s earlier indication of the end of its rate-hiking cycle. The committee emphasized its readiness for further rate hikes if necessary to maintain inflation targets, stating that a tight monetary stance will persist until a significant and sustained decline in monthly inflation trends is observed, and inflation expectations align with projections. It also signaled that monetary policy would be tightened in response to significant and persistent inflation deterioration.
• On 23/03/2024, The House passed a $1.2 trillion government funding bill with a vote of 286-134, sending it to the Senate shortly before the deadline to prevent a shutdown. The Senate voted 78-18 to advance the bill procedurally, but a final vote with the approval of all 100 senators is needed to pass it before the midnight deadline and avoid a partial shutdown. President Joe Biden has urged Congress to pass the bill quickly, stating he will sign it. House Minority Leader Hakeem Jeffries emphasized the importance of the bill, acknowledging the imperfect process but highlighting its positive outcome for the American people. The bill, released earlier in the week, provides funding for various government departments and agencies, totaling $1.659 trillion through September, aiming to end months of stopgap measures and negotiations. Sen. Chris Coons expressed confidence in the bill’s passage but noted that avoiding a shutdown hinges on a few Senate Republicans’ cooperation.
• On 25/03/2024, China has introduced guidelines to phase out U.S. processors in government computers, impacting Intel and AMD chips, as reported by the Financial Times. These guidelines also affect Microsoft’s Windows and foreign-made database software, favoring Chinese alternatives. The move aims to boost China’s domestic semiconductor industry and reduce reliance on foreign tech amid the ongoing U.S.-China tech war, where semiconductors are a focal point. The U.S. has imposed export restrictions to limit China’s access to semiconductor technology, while Chinese tech firms like Huawei and SMIC have faced sanctions.
• On 26/03/2024, The Russian government has instructed companies to decrease oil output in the second quarter to ensure compliance with a production target of 9 million barrels per day (bpd) by the end of June, aligning with its commitments to OPEC+. Deputy Prime Minister Alexander Novak announced earlier this month that Russia would cut oil output and exports by an additional 471,000 bpd in the second quarter, coordinating with OPEC+ members. The reduction will focus on output rather than exports, with production expected to drop to nearly 9 million bpd by June if the plan is implemented as intended. The government has provided specific targets to individual companies to meet its OPEC+ pledge and support international oil prices.
• On 27/03/2024, Asia-Pacific markets exhibited a mixed performance on Wednesday, with investors analyzing economic data from China and Australia amidst the Japanese yen weakening to 151.97 against the US dollar, marking a 34-year low. Japan’s Nikkei 225 index rebounded by 0.9% to close at 40,762.73, alongside the broader Topix rising 0.66% to 2,799.28. China reported a 10.2% year-on-year increase in combined industrial profit for January and February, though industrial profits for 2023 declined by 2.3%. Consequently, China’s CSI 300 index dropped 1.16% to 3,502.79, reaching a one-month low, while Hong Kong’s Hang Seng index fell 1.44%. Australia witnessed a 3.4% year-over-year increase in consumer price inflation for February, following the central bank’s cautious stance on interest rate adjustments. The S&P/ASX 200 index closed 0.51% higher at 7,819.60, while South Korea’s Kospi index dipped 0.07% to 2,755.11, after reaching a two-year high on Tuesday, with the Kosdaq index ending 0.53% lower at 911.25.
• On 29/03/2024, The S&P 500 ended Thursday with a modest gain, marking its strongest first-quarter performance in five years. Closing at 5,254.35, the benchmark index edged up by 0.11%, hitting a new all-time high during the session. Similarly, the Dow Jones Industrial Average also reached a record high, adding 47.29 points to finish at 39,807.37. However, the Nasdaq Composite slipped slightly, closing at 16,379.46, down 0.12%. Throughout March, the S&P 500 climbed 3.1%, while the Nasdaq and Dow increased by 1.8% and 2.1%, respectively, marking the fifth consecutive month of gains for all three major indexes. Nvidia, a key player in the artificial intelligence sector, was a significant driver of these gains, with its stock surging by 82.5% for the quarter and 14.2% for March alone. In economic news, initial jobless claims for the week ending March 16 slightly surpassed economists’ expectations, coming in at 210,000 compared to the predicted 211,000.
• On 30/03/2024, in February, inflation met expectations, likely keeping the Federal Reserve from considering interest rate cuts for now, based on its preferred gauge of price pressures. The personal consumption expenditures price index, excluding food and energy, rose by 2.8% over the past 12 months and 0.3% from the previous month, in line with estimates. Including food and energy costs, the headline PCE index increased by 0.3% for the month and 2.5% over the year, matching projections. Rising energy costs were a major factor in the headline figure, while inflation pressures were more pronounced in the goods sector compared to services. Despite the uptick in inflation, consumer spending surged by 0.8% in the month, potentially indicating further inflationary pressures. The Federal Reserve, which targets 2% annual inflation, is expected to maintain its current stance, with markets anticipating rate cuts later in the year in response to persistently high inflation.