Global Wrap by KT-Zmico

Key releases to watch:

  • Friday: U.S. preferred inflation index (Feb.), China manufacturing, non-manufacturing PMI (March), Thailand trade balance (Feb.), South Korea industrial output (Feb.), JapanCPI, jobless rate and labor market data, household spending andindustrial output (Feb.), South Africa trade balance (Feb.), euro-area inflation (March), U.K. GDP (4Q), Germanyunemployment (March)Personal spending probably increased 0.2 percent in February for a second month, while incomes continued to improve, economists forecast the Commerce Department to report.

MACRO NEWS

German Inflation Decelerates in Dip Predicted by ECB

Inflation in Europe’s largest economy decelerated more than forecast in March. Consumer-price growth in Germany slowed to 1.5 percent from 2.2 percent the previous month, the Federal Statistical Office said on Thursday, marking the first weakening since August 2016. Economists had forecast inflation of 1.9 percent. The decline partly reflects the timing of the Easter holiday, which was in March in 2016, and may be a precursor to softer euro-area numbers, which are due on Friday. Consumer-price growth in Spain also weakened more than expected in March, according to data published Thursday, with a slowdown to 2.1 percent from 3 percent last month. A drop in the overall euro area rate — forecast to come in at a lower pace of 1.8 percent — probably won’t surprise the European Central Bank, which predicted it would peak in the first quarter. Even so, that’s a reminder that price trends are being largely driven by volatile components such as energy and food.
While a pickup in inflation in the past year has kickstarted a discussion about the central bank’s monetary policy stance, President Mario Draghi has said he’s waiting for assurances that the improvement is broad based and sustainable. ECB Chief Economist Peter Praet said this week that it’s too soon to start discussing when to withdraw stimulus. (Bloomberg)

China March official manufacturing PMI rises to 51.8, beats forecasts

Activity in China’s manufacturing sector expanded at a faster pace than expected in March, adding to evidence that the world’s second-largest economy is gaining momentum early in the year, an official survey showed on Friday. The official Purchasing Managers’ Index (PMI) rose to 51.8 in March, compared with the previous month’s 51.6. It was above the 50-point mark that separates growth from contraction on a monthly basis. Analysts polled by Reuters had predicted a reading of 51.6, pointing to a solid expansion as China’s industrial sector continued to benefit from higher prices and a recovery in demand fueled by a construction boom. (CNBC)

CORPORATE NEWS

PetroChina Leaves Worst Year Behind With Plans to Boost Spending

PetroChina Co. plans to raise spending for the first time in five years as the country’s biggest oil and gas producer seeks to move on after posting its lowest-ever profit. The company will raise spending 11 percent to 191 billion yuan ($28 billion) this year, the Beijing-based PetroChina said Thursday. It also reported a 78 percent drop in net income to 7.86 billion yuan, the third year of declines and its worst profit on record. PetroChina joins its state-owned rivals that said last week they both intend to boost capital expenditure by more than 40 percent. The increase in China follows a global investment rebound, which the International Energy Agency says will be led by U.S. producers, as explorers recover from the slump that forced spending cuts, layoffs and writedowns.(Bloomberg)

Biggest Chinese Banks’ Bad-Loan Challenge May Finally Be Easing

The bad-loan challenge for China’s biggest banks, which worsened steadily over much of the first half of the decade, may finally be easing. Earnings reports this week from Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Agricultural Bank of China Ltd. showed that their provisions for losses on bad loans stabilized last year, helping them to post higher-than-estimated profits.

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