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Wall Street Gains as Dow Jumps 253 Points
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U.S. stocks increased sharply on Wednesday, hitting a four-day winning streak as banks and tech lifted major indexes higher.
The Dow Jones industrial average closed 253.04 points higher at 24,893.49 after dropping as much as 150 points. Goldman Sachs contributed the most to the gains, climbing 2.8 percent. The 30-stock index also pared all of its 2018 losses and reported its longest winning streak since Jan. 5.
The S&P 500 rose 1.3 percent to 2,698.63, with financials and tech each gaining over 1.5 percent. Bank of America, J.P. Morgan Chase, Citigroup and Morgan Stanley all traded higher. The financials sector had its best day since Nov. 28. The index also turned positive for 2018.
The Nasdaq composite climbed 1.9 percent to end at 7,143.62, as shares of Facebook, Amazon, Netflix and Alphabet increased.
U.S. equities opened lower on the back of stronger-than-expected inflation data.
Seven of the 11 major S&P 500 sectors were higher. The decliners included the typically defensive sectors: consumer staples, utilities and real estate.
The CBOE Volatility index was down at 21.10 points, slipping below 20 for the first time since Feb. 5 and well off the 50-point mark it hit during last week's sell-off.
The SPDR S&P Bank exchange-traded fund (KBE), rose 2.9 percent and posted its best day since Nov. 29.
Concerns of rising inflation have recently weighed down Wall Street. Last week, all three major U.S. indexes finished the five-day trading period more than five percent down each, with the Dow delivering its worst performance since January 2016.
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Japan Export Growth Accelerates in January
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Japanese exports increased for the fourth straight month in January as shipments to Asian and western Europe grew.
Exports climbed 12.2 percent year on year in January, figures according to the Ministry of Finance. Exports increased 9.3 percent in December.
Outbound shipments to Asia were up 16 percent while those to western Europe rose 20.8 percent. Imports also increased in January, climbing 7.9 percent year on year, short of the 8.3 increase percent forecast by economists.
U.S.-bound shipments were 1.2 percent higher in the year to January, led by steel, batteries and medicines, while car shipments declined 3.9 percent. The small rise in U.S.-bound exports followed a 3.0 percent gain in the previous month.
Those numbers resulted in a trade deficit of ¥943.4 billion ($8.9 billion). Economists expect exports will continue to expand in the coming months, led by demand for the semiconductor-related products that lifted exports in 2017.
Analysts are also wary about a rising yen as well as the U.S. stance towards protectionism ahead of the mid-term elections later this year, and potential effects on Japan's exports of cars and other products.
A strong yen erodes profits at Japanese manufacturers and could hurt the otherwise buoyant economy, which posted an eighth consecutive quarter of growth in October-December.
The yen was flat against the dollar at ¥106.31 following the publication of the trade figures.
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New Zealand Services Growth Robust In January
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New Zealand's service sector activity continued to expand strongly in January, survey figures from Business NZ showed Monday.
The performance of services index, or PSI, dropped to 55.8 in January from 56.0 in December. However, any reading above 50 indicates expansion in the sector.
The sub-index for new orders fell below the 60.0 point mark for the first time since April last year. It declined to 57.6 from 60.1.
"While the PSI is relatively robust, combined with the Performance of Manufacturing Index it nonetheless signals something of a slowing in GDP growth for the near term," Craig Ebert, senior economist at Business NZ, said.
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Australia's Consumer Confidence Weakens Further
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Australia's consumer confidence weakened for the second straight time during the week ended February 18, a weekly survey compiled by the ANZ bank and Roy Morgan Research showed Tuesday.
The consumer confidence index dropped to 115.3 from 119.5 in the preceding week. Views towards current economic conditions fell 5.5 percent last week, bringing the sub-index to an eight-week low of 107.0.
Similarly, perceptions of future economic conditions declined to a 13-week low of 106.3.
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EU Names Spain’s de Guindos as Next ECB Vice-Chair
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Eurozone's finance ministers selected Spanish Economy Minister Luis de Guindos to succeed European Central Bank Vice President Vitor Constancio in May, a move that is seen to increase the odds of a German official becoming the head of the central bank next year.
Choosing a Southern European for the position increases the possibility that a northerner such as German Bundesbank governor Jens Weidmann could be voted to take the place of Mario Draghi as the leader of the ECB in 2019. The decision could have an impact to the bank's ultra-loose monetary policy for the common currency zone.
In a statement released by the EU following a short discussion among finance ministers, the Eurogroup backed the candidacy of Luis de Guindos for the position of Vice President of the European Central Bank. After the selection, De Guindos said he would step down from his post as Economy Minister within days.
A number of EU legislators opposed his appointment as ECB Vice-President on worries that the nomination of a politician could impact the independence of ECB, a criticism that was dismissed by De Guindos.
Initially, there were two candidates for the post: De Guindos and Irish central bank governor Philip Lane. Ireland decided to withdraw Lane's name for the position.
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Walmart Shares Tumble on Weaker Holiday Online Sales
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Walmart shares tumbled after posting weak online sales for the Christmas period and issuing a disappointing annual profit forecast.
In the three months to December, online sales were 23 percent higher. However, the increase was less than half the growth seen in the prior quarter and down from the same period in 2016.
Shares in the world's biggest retailer declined more than 10 percent to $94.11. This year through Friday's close, the stock has risen by 6.1 percent.
The retailer reported its online revenue clocked in at $11.5 billion in 2017, but it suffered losses on the said sales. CEO Doug MCMillon said e-commerce losses would be “about the same” for the current fiscal year. He said that the firm was making progress in its efforts to be at the same level with Amazon and other competitors.
Under its transformation strategy, Walmart will spend more on Walmart.com and reduce spending on marketing for its Jet.com website, which targets younger and more affluent shoppers.
Despite higher-than expected sales growth at Walmart's U.S. stores, which came in at 2.6 percent, net profit declined 42 percent to $2.2 billion.
Walmart expects earnings of $4.75 to $5 per share this financial year, excluding some items, against the estimate of $5.13 by Wall Street.
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Japan All Industry Activity Grows At Slower Pace
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Japan's all industry activity growth halved in December, the Ministry of Economy, Trade and Industry reported Wednesday.
The all industry activity index rose 0.5 percent month-on-month in December, following November's 1 percent increase. Nonetheless, this was the third consecutive increase in activity and bigger than the expected 0.4 percent rise.
Industrial production advanced 2.9 percent, while construction activity shrank 0.4 percent and tertiary industry activity contracted 0.2 percent in December.
On a yearly basis, all industry activity growth slowed to 1.8 percent in December from 2 percent a month ago.
In the fourth quarter, all industry activity rebounded 0.7 percent after declining 0.3 percent in the third quarter.
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ARGENTINA: Merval Rises As Fed Minutes Point To Gradual Increase In U.S. Rate
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Merval, the main index of the Buenos Aires Stock Exchange, rose 0.85%, closing at 33,108.16 points, in a volatile session, after the Federal Reserve meeting minutes showed that the U.S. central bank will move gradually towards higher interest rates.
"The main US stock indices increased following the minutes of the Federal Reserve. The local market was not kept aside," said Eduardo Fern?ndez, an analyst at Rava Burs?til.
Ternium Siderar shares rose 0.32% even after the company reported a consolidated net profit of result of 848.1 million pesos for the fourth quarter of 2017, 10.12% lower compared to the same period of the previous year.
The Argentinean state-owned oil company YPF also ended higher (+1.22%) after starting the sale of its stake in Metrogas, dedicated to the distribution of natural gas.
The oil company Vista Oil & Gas reported that it agreed to acquire an oil operating platform of Pampa Energ?a (+2.51%) and Pluspetrol Resources Corporation in Vaca Muerta.
The shares of Distribuidora de Gas Cuyana (-2.36%), TGS (-2.34%), San Miguel (-1.38%), and Tenaris (-,86%) fell the most, while Cresud (+5.16%), Holcim (+4.15%), and Autopistas del Sol (+3.68%) posted the strongest gains.
The locally traded U.S. dollar rose 0.37%, to 19.92 Argentinean pesos, due to lower interest rates from Lebacs, the country's central bank bonds.
"The drop in the interest rate set by the central bank to the Lebac left the greenback without a clear trend, with sudden ups and downs amid a sharp drop in the trading volume," said Fernando Izzo, an analyst at ABC Mercado de Cambios.
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Eurozone Business Growth Remains Firm in February
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Eurozone business growth remained strong in February, with companies at their most optimistic in over five years, a private-sector survey showed.
The eurozone was one of the best-performing major economies in 2017, and its businesses started 2018 by ramping up activity at the quickest rate in well over a decade.
However, February's preliminary Purchasing Managers' Index (PMI) indicated that the pace of growth set in January, the fastest in well over a decade, has lost a little momentum.
IHS Markit's composite flash PMI for the euro zone, seen as a good guide to economic health, dropped to 57.5 in February.
Nevertheless, this month's reading was still one of the most growth - or farthest above 50 - in more than 11 years. According to IHS Markit, the eurozone was on track for its best quarterly growth since the second quarter of 2016, with the PMI pointing to first-quarter growth of 0.9 percent.
Companies shared that optimism - an index measuring expected output in a year's time climbed to 68.3 from 68.0, its highest since IHS Markit started collecting the data in July 2012.
Consumer confidence in the bloc dropped more than expected this month, but that was from a 17-year high set in January, official data recently showed.
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Japan Overall Nationwide Inflation Advances 1.4% In January
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Overall nationwide consumer prices in Japan climbed 1.4 percent on year in January, the Ministry of Internal Affairs and Communications said on Friday.
That exceeded forecasts for 1.3 percent and was up from 1.0 percent in December.
Core CPI, which excludes food prices, advanced an annual 0.9 percent - above expectations for 0.8 percent and unchanged from the previous month.
Among the individual components, prices were higher annually for fuel, medical care, food, transportation and education, while they were down for furniture and housing.
On a monthly basis, overall inflation added 0.4 percent and core CPI gained 0.2 percent.
Among the individual components, prices were higher monthly for food, fuel and furniture, while they were down for clothing, recreation and medical care.
Also on Friday, the Bank of Japan said that producer prices in Japan were up 0.7 percent on year in January.
That was shy of expectations for a gain of 0.8 percent, which would have been unchanged from the previous month.
On a monthly basis, producer prices were down 0.6 percent after adding 0.2 percent in December.
Prices were down for leasing, transportation and financial services, while they were higher for advertising services.
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Germany Business Confidence Drops in February
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Sentiment among German businesses dropped in February, according to a closely watched survey that comes on the heels of other polls indicating enthusiasm is easing after hitting multi-year peaks.
The Munich-based Ifo economic institute said its business climate index, based on a monthly survey of some 7,000 companies, declined to a 5-month low of 115.4 from 117.6 in January. The drop in the German headline figure was mainly caused by managers scaling back their business expectations for the next six months, with the respective sub-index dropping to a 10-month low.
A sector breakdown of the Ifo figures revealed that the main impediment came from manufacturing, where the mood among managers had reached a record peak in January. Business sentiment also deteriorated in wholesaling, construction and retailing.
The Ifo data come a day after a survey of German purchasing managers also pointed to a decline in output growth expectations.
Ifo chief Clemens Fuest said firms were less satisfied with their current business situation, but the indicator remains at its second-highest level since 1991.
This upbeat growth outlook was also mirrored in the finance ministry's monthly report that was recently released which said recent data was pointing to a continuation of the economic upswing at the beginning of the year.
Germany is coming off of a year of strong economic expansion. Economists broadly expect the country to continue performing well in 2018, but some have questioned whether the rapid pace can hold.
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BOJ has no Plan Conduct Another Policy Review: Kuroda
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Bank of Japan Governor Haruhiko Kuroda said that conducting another comprehensive assessment of the central bank's monetary policy is currently not on the table.
Speaking to the parliament, the head of the Japanese central bank said that things are progressing smoothly, so there are no plans at this stage to hold another comprehensive review, citing the steady recovery in the economy.
The comments were made by Haruhiko when asked by a legislator whether BOJ would conduct an assessment of why its policy had failed to drive up inflation to its 2 percent target.
He reaffirmed the BOJ's resolve to retain its massive monetary stimulus with inflation far from its target.
The central bank overhauled its policy framework to one targeting interest rates from the rate of monetary printing in 2016, after three years of massive asset purchasing failed to accelerate prices pressures.
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UK Services Sector Logs Strong Growth: CBI
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UK services sector registered strong growth in business volumes in three months to February, the latest Services Sector survey from the Confederation of British Industry showed Monday.
Both business and professional services and consumer services logged a rise in profits for the first time since November 2015.
Business and professional services said their business volumes grew at the fastest pace since August 2015, and growth is set to accelerate further in the three months to May.
In the consumer services sector, volumes grew at the fastest pace in a year. Consumer services growth is expected to ease next quarter, but nonetheless remain firm. Rain Newton-Smith, CBI chief economist, said "It's great to see the services sector start the year off on a firm footing."
"Despite feeling the pinch from high inflation, business volumes have bloomed, profits have grown for the first time in over two years and hiring is on the up."
Prices continued to rise in consumer services but were flat in business and professional services. Next quarter, price growth is expected to accelerate in both sub-sectors, survey showed.
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Bank Of Korea Keeps Benchmark Interest Rate Unchanged At 1.50%
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The Bank of Korea's monetary policy board on Tuesday voted to hold the nation's benchmark interest rate steady at 1.50 percent, in line with expectations.
The decision was the first since the bank hiked rates by 25 basis points in November, marking the first change in the benchmark in 14 months. It also marked the bank's first rate hike since 2011.
The rate had been static since June of last year, when the bank trimmed the rate from 1.50 percent.
Persistently low inflation and touches of softness in the economy allowed the central bank to leave the monetary stimulus in place.
"The board considers that the acceleration in global economic growth has continued. Volatility in the global financial markets has increased substantially, with government bond yields rising and stock prices falling in line mainly with strengthening expectations of monetary policy normalizations in major countries," the bank said.
Consumer prices were up 0.9 percent on year in January - well shy of forecasts for 1.5 percent, which would have been unchanged from the December reading. On a monthly basis, inflation was up 0.5 percent, accelerating from 0.3 percent in the previous month.
Core CPI, which excludes food prices, gained 0.2 percent on month and 1.1 on year after rising 0.2 percent on month and 1.5 percent on year a month earlier.
Producer prices gained 1.2 percent on year in January, slowing from 2.2 percent in December. On month, producer prices gained 0.4 percent after remaining flat in December.
"Looking ahead it is forecast that consumer price inflation, after remaining in the low- to mid-1% range for some time, will pick up and gradually approach the target level from the second half of this year. Core inflation will also gradually rise," the bank said.
South Korea's gross domestic product contracted a seasonally adjusted 0.2 percent on quarter in the fourth quarter of 2017. That missed forecasts for an increase of 0.5 percent following the 1.5 percent jump in the three months prior.
On a yearly basis, GDP gained 3.0 percent - again missing expectations for 3.2 percent and down from 3.8 percent in the previous three months.
For all of 2017, South Korea's GDP was up 3.1 percent.
"The board expects domestic economic growth to be generally consistent with the path projected in January. It anticipates that investment will slow, but that the trend of steady increase in consumption will continue," the bank said.
South Korea's unemployment rate eased to 3.6 percent in January from 3.7 percent in December, which was revised up from 3.6 percent.
South Korea posted a merchandise trade surplus of $3.7 billion in January, marking the 72nd straight months in the black.
Exports jumped 22.2 percent on year to $49.21 billion in January - climbing in 15 straight months and up from $40.25 billion a year earlier.
Imports spiked an annual 20.9 percent to $45.48 billion.
"Looking ahead, the board will conduct monetary policy so as to ensure that the recovery of economic growth continues and consumer price inflation can be stabilized at the target level over a medium-term horizon, while paying attention to financial stability," the bank said.
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Qualcomm to Consider Broadcom Takeover Bid on Higher Price Tag
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Qualcomm had a change of heart regarding an acquisition offer by its rival Broadcom, stating it is open to considering the bid if it is raised to $160 billion including $25 billion in assumed debt, according to sources cited by Financial Times.
The change in the company's stance marks a big change for Qualcomm executives, who have been opposing the deal on antitrust grounds. Sources close to Qualcomm said that Broadcom has recently made sufficient progress in tackling the competition issues in order to make way for talks to reach a phase where the two parties can reach an agreed price.
Qualcomm is seeking that Broadcom sweetens its offer by at least 15 percent to above $90 per share, up from its present $79 per share offer, to achieve what would be the biggest tech deal ever brokered, according to people knowledgeable of the proceedings. The total $160 billion price tag would include Broadcom taking on $25 billion in Qualcomm debt.
Several sources close to Qualcomm's senior management said the firm is now open to sealing the deal, but the takeover depends on Hock Tan, Broadcom's CEO, who can decide whether to change course and increase his offer price.
Qualcomm has sent a letter to Tan, expressing the team's interest in pursuing a non-disclosure deal that would enable the two parties to begin due diligence. Qualcomm chairman Paul Jacobs also called for the two chipmakers to set a meeting to negotiate a price as soon as possible. The proposals were dismissed by Broadcom, but said that it was ready to discuss terms that were 'realistic' for both companies.
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Japan Industrial Output Falls 6.6% In January
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Industrial production in Japan contracted a seasonally adjusted 6.6 percent on month in January, the Ministry of Economy, Trade and Industry said in Wednesday's preliminary reading.
That missed forecasts for a decline of 4.0 percent following the 2.9 percent gain in December.
On a yearly basis, industrial production added 2.7 percent - again missing forecasts for 5.3 percent and down from 4.4 percent in the previous month.
Upon the release of the data, the METI maintained its assessment of industrial production saying that it is picking up slowly.
Industries that weakened in January included transport equipment, business-oriented machinery and electronic parts and devices.
Shipments were down 5.6 percent on month and up 4201percent on year.
Industries that were down included transport equipment, business oriented machinery and electronic parts - while communications electronics equipment was up.
Inventories shed 0.6 percent on month and climbed 1.4 percent on year. Industries in contraction included business oriented machinery, transport equipment and iron and steel.
Industries that were up included ceramics, non-ferrous metals and chemicals.
According to the survey of production forecast, industrial output is expected rise 9.0 percent in February and fall 2.7 percent in March.
Industries that are expected to contribute to the increase in February include business oriented machinery, transport equipment and electronic parts.
Industries expected to contribute to the decline in March include electronic devices, electrical machinery and transport equipment.
Also on Wednesday, the METI said that retail sales in Japan were down a seasonally adjusted 1.8 percent on month in January.
That missed forecasts for a decline of 0.6 percent following the 0.9 percent gain in December.
On a yearly basis, retail sales advanced 1.6 percent - again missing expectations for a gain of 2.4 percent and slowing from 3.6 percent in the previous month.
Sales from large retailers advanced an annual 0.5 percent - exceeding forecasts for 0.4 percent and slowing from 1.1 percent a month earlier.
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Fed’s Powell Sees Strong Economy, Strikes Hawkish Tone for Policy
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In his first public appearance as the head of the U.S. central bank, Federal Reserve Chairman Jerome Powell pledged to prevent the economy from overheating while staying on course of a path of gradually hiking interest rates.
In his testimony before the U.S. House of Representatives' Financial Services Committee, Powell gave a nod to the economy's recent show of strength, a comment that investors perceived as hawkish and increased bets on four rate increases in 2018.
The central bank's last wave of economic projections in December indicated three rate hikes this year.
But Powell's overall tone was that of continuity, as he told legislators that the Fed would balance the need to prevent excessive inflation with the benefits of allowing the economy to take advantage of the benefits of the tax cuts and solid global growth.
He said that the Fed was currently assessing how low employment could fall before inflation began to bite. The U.S. jobless rate is at a 17-year low of 4.1 percent.
Powell added that some of the challenges the economy faced in prior years have become tailwinds, noting the recent change in fiscal policy and a global economic recovery. But he also noted that inflation continues to be below the 2 percent target. In the FOMC's perspective, he said that further gradual rate hikes in the federal funds rate will best help them reach both objectives.
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COLOMBIA: Bogot? Asks Caracas To Open Humanitarian Channel
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The President of Colombia Juan Manuel Santos asked the Venezuelan government to allow at least one humanitarian channel to alleviate the situation of the country's population.
According to him, Venezuela's trouble is "an issue that greatly concerns us." He added that both Colombia and Peru are receiving significant inflows of Venezuelan migrants.
Santos said that both countries are concerned "not only with the social situation that the Venezuelan people are experiencing, and the crisis that the country is experiencing and the repercussions on the population," but also with what he called as "the destruction of democracy, disrespect, and violation of all the fundamental rights of Venezuelan citizens and the overflow of democratic institutions."
Santos also stressed that Colombia and Peru would continue to insist "until we see Venezuela with a functioning democracy again."
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Eurozone Inflation Drops in February, Highlights ECB Caution
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Eurozone inflation fell to a 14-month low in February, which highlights the European Central Bank's caution in removing stimulus despite growth surpassing expectations and the bloc's economy appearing to be on its best shape in a decade.
Official figures from the EU's statistics agency Eurostat showed the headline year on year inflation rate dropped from 1.3 percent to 1.2 percent in February, its weakest level since December 2016.
A closely watched measure of underlying inflation which excludes volatile energy and unprocessed food prices remained steady at 1.2 percent.
Inflation in services and non-energy industrial goods actually rose over the period, and Pantheon Macroeconomics' Claus Vistesen suggested “only unfavourable rounding kept the core rate from nudging higher to 1.1 percent”.
Energy prices in particular have been driving a decline in headline inflation rate for several months, while February's figure was also affected by a sharp pull-back in food price inflation
Hoping to raise inflation back to target after years of misses, the ECB has purchased more than 2 trillion euros ($2.45 trillion) worth of bonds in the past three years to boost investment and consumption.
Policymakers have warned that a stronger euro could threaten the ECB's medium-term goal of keeping inflation below, but close to, 2 percent, but despite the currency's impressive recent gains against the dollar, it has remained fairly stable on a trade-weighted basis over the last six months.
The data had little immediate impact on the euro, which was down around 0.15 percent against the dollar at publication time.
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Treasury Yields Slide as Trump Slaps Tariffs on Steel, Aluminum Imports
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Prices of U.S. government bonds edged up, driving down yields, as investors hurried to secure safe-haven government paper after the Trump administration announced its decision to impose global tariffs on steel and aluminum imports that triggered a stock-market selloff.
In his second testimony to the Congress, Federal Reserve Jerome Powell said he saw no indications of solid wage pressure, language that some market participants aw as an effort to backtraw his hawkish comments earlier in the week. The 10-year Treasury note yield declined 6.7 basis points to 2.802 percent, denoting the biggest one-day decline since September 5, according to WSJ Market Data Group.
The two-year note yield, the most affected by the monetary policy outlook, edged down 5.6 basis points to 2.206 percent, marking the biggest one-day decline in three weeks. The 30-year bond yield fell 4.6 basis points to 3.084 percent.
The last two days of trading has helped to counter some of the selloff in February when a revival of inflation worries weakened the appetite for bonds.
Treasury yields climbed after President Donald Trump announced levies on steel and aluminum imports, causing stocks to slide. Jittery investors flocked to government paper to secure safe-haven assets to protect themselves against market volatility.
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Gold Prices Rise Amid Concerns Over Trade War, Italy Elections
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Gold prices increased on Monday as the dollar remained subdued on concerns over a potential global trade war, as well as amid uncertainty surrounding the outcome of elections in Italy, providing support to the precious metal.
Spot gold gained 0.3 percent at $1,326.41 per ounce. Earlier in the session, it notched $1,327.03, their highest since Feb. 27.
U.S. gold futures rose 0.3 percent to $1,327.70 per ounce.
The dollar index, which measures the U.S. currency against a basket of major peers, was mostly unchanged at 89.971, after falling against most currencies on Friday.
The greenback fell from its six-week high that it hit on March 1, after U.S. President Donald Trump announced plans to levy hefty tariffs on aluminium and steel imports fueling fears of retaliation from its trade partners triggering a trade war.
Italian voters delivered a hung parliament on Sunday and if early projections are confirmed, none of Italy's three main groups will be able to rule alone and there is little prospect of a return to mainstream, moderate government, giving the European Union a new predicament to deal with.
Spot gold could increase to $1,332 per ounce, as it has pierced above a resistance at $1,325, according to Reuters technical analyst Wang Tao.
In other precious metals, silver climbed 0.6 percent to $16.58 per ounce. Platinum rose 0.6 percent to $965.49 per ounce, while palladium added 0.3 percent at $994.50.
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Australia Keeps Rates On Hold
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Australia's central bank decided to leave its key interest rate unchanged at a record low, as widely expected, on Tuesday.
The board of the Reserve Bank of Australia, governed by Philip Lowe, maintained the cash rate at 1.50 percent.
The bank noted that the low level of interest rates is continuing to support the Australian economy.
The Bank's central forecast is for the Australian economy to grow faster in 2018 than it did in 2017.
The central forecast is for CPI inflation to be a bit above 2 percent in 2018.
Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
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Volcker Rule Reviewed for ‘Material Changes’: Fed’s Quarles
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The top regulator for the U.S. Federal Reserve on Monday said that the country's regulators are actively assessing the possibility of significantly rewriting the “Volcker Rule.”
Speaking at a gathering of bankers in Washington, Fed Vice Chair for Supervision Randal Quarles said that regulators want to make “material changes” in order to streamline and simplify a number of aspects of the restrictions on certain bank trading, which were implemented in the wake of the 2007-2009 financial crisis.
The comments are the most recent and most clear recommendation yet of regulators to overhaul one of the central post-financial crisis rules, which bans lenders from making profit-seeking trades on their own account. However, its present form, established in 2013, has been criticized by bank executives as complex, ambiguous and unworkable, points to which Quarles agrees.
In his prepared remarks, Quarles expressed his belief that the regulation implementing the Volcker rule is not 'working well'. He said that all his regulatory colleagues have expressed their support for the proposition that the regulation is overly complex and would benefit from streamlining.
According to Quarles, regulators are actively working to simplify key terms that define the rule's boundaries, including “proprietary trading” and “covered fund”.
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Australia GDP Expands 0.4% In Q4
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Australia's gross domestic product advanced a seasonally adjusted 0.4 percent on quarter in the fourth quarter of 2017, the Australian Bureau of Statistics said on Wednesday.
That was shy of expectations for 0.5 percent and down from 0.6 percent in the three months prior. On a yearly basis, GDP gained 2.4 percent - again missing forecasts for 2.5 percent and down from 2.8 percent in Q3.
"Growth this quarter was driven by the household sector, with continued strength in household income matched by growth in household consumption," ABS Chief Economist Bruce Hockman said.
Household final consumption expenditure increased 1.0 percent for the quarter.
Exports of goods and services detracted 0.4 percentage points from GDP growth.
Final consumption expenditure picked up 1.1 percent on quarter and 3.3 percent on year, while gross fixed capital formation shed 1.2 percent on quarter and climbed 2.5 percent on year.
The terms of trade added 0.1 percent on quarter and fell 1.0 percent on year, while real disposable income was flat on quarter and gained 1.5 percent on year.
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Treasury Yields Slide amid Tariff Uncertainty, CVS Bond Sale
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U.S. government bonds slightly retreated on Tuesday, paring early gains, after traders position amid a massive corporate bond offering by CVS Health and as uncertainty regarding global tariffs on aluminum and steel imports weighed on markets.
The 10-year Treasury note yield was mostly unchanged at 2.877 percent. Yield on the two-year note yield was mostly flat at 2.246 percent. The long bond or the 30-year bond rate edged down by 1.6 basis points to 3.135 percent.
According to traders, the bond market steadied as CVS Health Corp. acquired around $50 billion dollar worth of debt on Tuesday. Firms looking to issue bonds depend on dealers to unload the massive stockpiles and the said dealers will most likely hedge a sudden jump in interest rates by letting go of their Treasury holdings.
U.S. government paper experienced brief selling earlier in the session after House Majority Leader Paul Ryan, along with other congressional Republicans, appear to step up pressure on President Donald Trump to ease up on his protectionist stance. On the other hand, Treasury Secretary Steven Mnuchin stated Mexico and Canada will be excluded from the tariffs if NAFTA is successfully renegotiated. The lack of certainty on the trade front has weakened the demand for stocks, while increasing the demand for bonds.
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Australia January Trade Surplus A$1.055
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Australia posted a merchandise trade surplus of A$1.055 billion in January, the Australian Bureau of Statistics said on Thursday.
That blew away forecasts for a surplus of A$200 million following the upwardly revised A$1.146 billion deficit in December (originally A$1.358 billion).
Exports gained A$1.394 billion or 4.0 percent on month to $33.924 billion.
Non-rural goods added A$869 million (4 percent) and non-monetary gold gained A$770 million (54 percent).
Rural goods fell A$312 million (8 percent) and net exports of goods under merchanting tumbled A$9 million (17 percent). Services credits added A$77 million (1 percent).
Imports sank A$807 million or 2.0 percent to AA$32.869 billion.
Consumption goods lost A$586 million (7 percent), non-monetary gold dropped A$95 million (19 percent) and capital goods fell A$90 million (1 percent).
Intermediate and other merchandise goods lost A$68 million (1 percent), while services debits picked up A$31 million
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U.S. Consumer Credit Increased in January
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U.S. consumer debt grew in January by the least in four months on a sharp slowdown in use of revolving products such as credit cards, Federal Reserve data showed.
The Fed said consumer credit increased by $13.9 billion in January after surging by $19.2 billion in December. Economists had expected consumer credit to increase by $17.9 billion.
The report said non-revolving credit such as student loans and car loans increased by $13.2 billion in January after rising by $13.1 billion in December.
Revolving credit, which largely reflects credit card debt, edged up by $0.7 billion in January following a $6.1 billion increase in the previous month.
Consumer credit climbed by an annual rate of 4.3 percent in January, as non-revolving credit surged up by 5.6 percent and revolving credit rose by 0.8 percent.
The slow growth in revolving debt, in line with sluggish household spending figures reported for January, indicates consumers may have been reluctant to increase credit-card balances following robust outlays in the fourth quarter. Gains in overall consumer credit cooled for a second month.
A strong jobs market and the tax cuts enacted in December are likely to support household spending in the first half of the year. The Fed's consumer credit report doesn't track debt secured by real estate, such as home equity lines of credit and home mortgages.
Lending by the federal government, which is mainly for student loans, increased by $26.3 billion in January, before seasonal adjustment.
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China CPI Jumps To 2.9% In February
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Consumer prices in China were up 2.9 percent on year in February, the National Bureau of Statistics said on Friday.
That exceeded forecasts for 2.4 percent and was up sharply from 1.5 percent in January.
On a monthly basis, consumer prices jumped 1.2 percent following the 0.6 percent gain in January.
The bureau also said that producer prices advanced an annual 3.7 percent versus expectations for 3.8 percent and down from 4.3 percent in the previous month.
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U.S. Services Data Suggests Upward Revision to 4th Quarter GDP
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U.S. economic expansion for the fourth quarter is likely to be revised higher after recent data indicated more spending on services than previously estimated by the government.
According to the Commerce Department's quarterly services survey, or QSS, added to December data on construction spending and manufacturers inventories in suggesting that gross domestic product grew much faster than the 2.5 percent annualized rate reported by the government in its second estimate last month.
Before the QSS data, economists had expected that GDP growth for the October-December quarter would be raised to about a 2.6 percent rate. Some now expect fourth-quarter GDP growth would be revised up to a 2.9 percent rate when the Commerce Department's statistics agency, the Bureau of Economic Analysis, incorporates the data into its third estimate to be published later this month.
Spending on intellectual property products was previously reported to have increased at a 2.4 percent rate in the fourth quarter.
“The QSS points to stronger services spending in the fourth quarter than the BEA had previously estimated,” according to Daniel Silver, an economist at JPMorgan in New York.
“And while the QSS often impacts health care categories within the spending data, we think that much of the expected fourth-quarter upward revision will be related to spending on motor vehicle maintenance and repair.”
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COLOMBIA: Colcap Raises Slightly On Ecopetrol, Caution With Elections
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Colcap, the main index of the Colombian Stock Exchange, added 0.41% to 1,480.56 points near Friday's closing, due to the rise of Ecopetrol's shares (+1.01%) in a session marked by a substantial business volume ahead.
The increase in Ecopetrol's stocks tracked the rebound in oil prices abroad.
Analysts at Davivienda Corredores noted that despite the slight rise, the Colombian index remains lagging behind the performance of other Latin American stock exchanges mainly because of the uncertainty for the legislative elections results.
On the business side, Avianca's shares rose by 1.13% despite reports that its subsidiary companies mobilized 2,320,638 passengers in February, 0.3% less than the passengers transported in the same month last year.
The locally traded U.S. dollar closed at 2,868.80 Colombian pesos, marking a 0.25% fall, due to the rebound in oil prices abroad.
"As long as oil prices remain close to US$ 60, the valuations will be limited. There was also a natural reaction before Sunday's legislative elections," said Wilson Tovar, an analyst at Acciones & Valores.
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Australian Exports to Grow after Securing U.S. Tariff Exemptions - Industry
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Australian steel and aluminum manufacturers recently said exports to the United States will grow after securing exemptions from tariffs signed into law by U.S. President Donald Trump.
Trump on Friday said Australia would become the third country to be free from a 25 percent tariff on steel imports and 10 percent for aluminum.
Exporting just more that A$400 million ($314.32 million) last year, Australia is a relatively small supplier of steel and aluminum to the United States.
“This is a great outcome for us and... (for) jobs in North America,” according to Mark Vassella Managing Director and CEO of BlueScope Steel, which is Australia's largest exporter.
Shares in BlueScope gained over three percent on Monday, outperforming the broader market, which marked modest gains.
While it was good news for Australian exporters, producers fear the U.S. tariffs could hit them indirectly, as exporters that are subject to the tariffs try to find other markets for their steel and aluminum.
Rejecting calls for additional laws to prevent potential dumping, Australian Prime Minister Malcolm Turnbull said existing measures were sufficient. Turnbull also said Australia would not join an international protest against the U.S. tariffs.
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Australia Business Confidence Slows In February - NAB
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Business confidence in Australia ebbed in January, the latest survey from National Australia Bank revealed on Tuesday with an index score of +9.
That's still positive, which means that optimists outnumber pessimists - although it's down from the downwardly revised +11 in January (originally +12).
Business conditionals picked up steam as the index climbed to +21 from the downwardly revised +18 in the previous month (originally +19).
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Japan Producer Prices Rise 0.6% In February
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Producer prices in Japan were up 0.6 percent on year in February, the Bank of Japan said on Tuesday.
That was shy of expectations for 0.78 percent, which would have been unchanged from the January reading.
On a monthly basis, prices added 0.2 percent after sliding 0.6 percent in January.
Individually, prices were higher for leasing and rental. They were down for advertising, transportation and architectural services.
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UK Household Spending Touches 6-Year Low in 2017
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Household spending weakened to its lowest annual growth for six years in 2017 amid Brexit-spurred inflation, with borrowing soaring and family savings plunging to a record low.
According to the Office for National Statistics, economic growth slowed to 0.4 percent in the final three months of last year, down from 0.5 percent in the third quarter as weaker household spending took its toll.
The ONS revised upgrowth for the year as a whole to 1.8 percent from the initial estimate of 1.7 percent, but this was still the lowest since 2012.
It leaves the UK with the lowest growth among the G7 economies at the end of 2017 as it enters the final year of its membership of the European Union.
The quarterly national accounts data showed Britons turned to debt to support spending in the face of last year's surging inflation, which outstripped meager wage growth.
The proportion of total income saved by households dropped to 4.9 percent in 2017, its lowest level since records began in 1963, the ONS said.
Overall household spending dropped the previous year to 1.7 percent, which was the lowest annual growth since 2011, according to the ONS.
In the fourth quarter, the current account deficit shrank to £18.4 billion, or 3.6 percent of GDP, down from £19.2 billion in the previous three months.
Net trade – exports less imports – made its largest contribution to full-year growth since 2011, the ONS reported.
Economists said there would be some relief on the way this year for households as wages are expected to start rising faster than inflation, which should help maintain growth in 2018.
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U.S. Factory Activity Slowed in March - ISM
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U.S. factory activity slowed in March amid shortages of skilled workers and rising capacity constraints, but growth in the manufacturing sector remains buoyed by strong domestic and global economies.
According to the survey of the Institute for Supply and Management, a surge in the cost of raw materials and worries among manufacturers about the impact of steel and aluminum import tariffs imposed by President Donald Trump last month to shield domestic industries from what he has described as unfair competition from other countries.
The ISM said its index of national factory activity slipped to a reading of 59.3 last month from 60.8 in February. A reading above 50 in the ISM index indicates growth in manufacturing, which accounts for about 12 percent of the U.S. economy.
The survey's prices index soared to its highest level since April 2011. There were price increases across 17 of 18 industry sectors last month. While a measure of new orders dropped, a gauge of backlog orders rose to levels last seen in May 2004.
The survey's customers' inventories index was at its lowest level since July 2011. A measure of factory employment dropped last month and the ISM said there were indications that labor and skill shortages were affecting production.
U.S. financial markets were little moved by the data, with investors worrying about a global trade war after China increased tariffs by up to 25 percent on 128 American products in response to the duties on aluminum and steel imports.
Nonetheless, the outlook for manufacturing remains upbeat amid dollar weakness, which is boosting the competitiveness of American-made goods on the international market.
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Fed’s Brainard Flags High Valuations Even after Stock Correction
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Federal Reserve Governor Brainard said that even with this year's correction, equities and other assets are still high in valuation by historical standards.
In a speech shortly after the stock market closed and pared some of the deep losses incurred from Monday, Brainard became the latest U.S. central bank official to voice caution regarding the level of the nine-year-old-bull run in the stock market.
Brainard said that the valuations in a broad set of market appears elevated in relation to historical norms, even after pricing in recent movements.
Price tags on multi-family homes and commercial real estate properties have also increased, while capitalization rates, have hit historical lows, she added.
Aside from stocks and real estate, the Fed official also issued a warning regarding cryptocurrencies such as bitcoin, which have observed big price declines this year after its astronomical surge in 2017.
She also said there are few signs that cryptocurrencies would pose a widespread threat to the financial system. She also noted that corporate bond yields are low, while spreads on high-yield bonds over Treasuries are close to the low-end of their historical range.
Along with her warnings regarding possible over valuations in financial markets, Brainard said Fed policy has helped curb the type of excessive risk-taking that resulted in the financial crisis of 2008.
The Federal Reserve has been gradually tightening policy, raising the benchmark lending rate six time since December 2015, as it looks to prevent the economy from overheating.
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U.S. Private Payrolls Rise in March
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U.S. private payrolls grew sharply in March as hiring increased across the board, which indicates a strong labor market that continues to support economic expansion.
Labor market momentum was also highlighted by a recent report that showed solid gains in employment in the services industries in March even though a sharp decline in new orders weighed on growth in the sector.
The Labor Department will publish its closely watched employment report on Friday.
The ADP National Employment Report showed private payrolls increased by 241,000 jobs in March after rising 246,000 in February.
The ADP report is jointly developed with Moody's Analytics. It said construction companies hired 31,000 workers in March and manufacturers added 29,000 jobs to their payrolls. Employment in the services sector increased by 176,000 jobs.
That was corroborated by the Institute for Supply Management's (ISM) non-manufacturing survey, which showed the ISM's employment sub-index rising to a reading of 56.6 in March from 55.0 in February.
The increase in services industry employment came despite the ISM non-manufacturing index falling 0.7 point to a reading of 58.8 as a measure of new orders declined 5.3 points. A reading above 50 indicates expansion in the sector, which accounts for more than two-thirds of U.S. economic activity.
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U.K. Economy Weighed Down by the ‘Beast From the East’ Snowstorm
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Heavy snow and weak consumer demand weighed on British services businesses in March, which grew at the slowest rate since just after the vote to leave the European Union in June 2016, a survey showed. However, the 'Beast from the East' may not be enough to stop the Bank of England from pushing another interest-rate increase.
The IHS Markit/CIPS services Purchasing Managers' Index (PMI) dropped to 51.7 in March from February's reading of 54.5, its lowest reading since July 2016.
Britain's construction PMI showed a similar decline on Wednesday, although manufacturing held up better.
Looking at the first three months of 2018 as a whole, the figures suggest Britain's economy expanded at a quarterly rate of just below 0.3 percent, down from an already-modest 0.4 percent at the end of 2017, IHS Markit said.
Reports this week showed snow and storms weighed on growth in services to its weakest in almost two years, and saw the construction industry contract for the first time in six months. While the pound fell after the services report, investors are still pricing in an around 85 percent likelihood of the BOE hiking rates in May.
The BOE has already factored in the hit from the bad weather, and downgraded its own estimate for the quarter. According to Markit, that means the Monetary Policy Committee's widely expected rate hike in May is still on the cards.
Not all the weakness in the PMI was weather-related, though.
IHS Markit said British services businesses reported weak consumer demand as well as concern about the country's departure from the EU in a year's time as being behind the slowest growth in new orders since July 2016.
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Wall Street Gains but Dow's 400-point Rally is Nearly Erased after FBI Report
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Wall Street's major indexes advanced on Monday as a softer stance by U.S. policymakers on China tariffs powered a rebound from last week's selloff, but stocks pared gains late in the session after a report that the Federal Bureau of Investigation raided the office of President Donald Trump's lawyer.
The Dow Jones industrial average rose 46.34 points to 23,979.10, with Merck and Intel as the best-performing stocks in the index. The S&P 500 climbed 0.3 percent to 2,613.16, with tech adding 0.8 percent. The Nasdaq composite advanced 0.5 percent to 6,950.34.
Amazon shares had risen as much as 2.3 percent before closing just 0.1 percent higher. Boeing gained as much as 2.7 percent before ending the session down 1.1 percent.
At its session high, the Dow rose as much as 440.42 points. The S&P 500 and Nasdaq gained as much as 1.9 percent and 2.3 percent, respectively.
Stocks climbed after Trump's new economic adviser Larry Kudlow told CNBC that the president may be open to forming an international coalition to grapple with trade issues involving China.
Investors will look for further signs of China's stance on trade relations when Chinese President Xi Jinping speaks at the Boao Forum economic conference on Tuesday.
The next corporate earnings season kicks off later in the week with financial companies BlackRock, Citigroup, J.P. Morgan Chase and Wells Fargo all scheduled to release their quarterly results.
Merck gained over six percent after a committee determined Keytruda has helped previously untreated lung cancer patients live longer.
Facebook climbed 1.3 percent ahead of CEO Mark Zuckerberg's testimony on Tuesday regarding the data scandal involving firm Cambridge Analytica.
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U.S. Automakers’ Shares Surge After Xi Announces China’s plan to Reduce Car Tariffs
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Shares of U.S. carmakers surged after Chinese President Xi Jinping announced the government's plans to “open the country's economy and to reduce the tariffs on automobiles.
Tesla edged up 5.2 percent while Fiat Chrysler advanced 2 percent. Ford Motor increased 1.8 percent and General Motors increased 3.3 percent. China is an important market for U.S. carmakers. European automakers also rose, with BMW rising 3 percent.
GM sold over 4 million cars in China in the previous year for the first time, while Tesla increased its revenue by twofold from China to $2 billion in 2017.
Xi said that his plans include greatly lowering import tariffs on foreign autos and reducing duties of other products. At the Boao Forum for Asia, Xi said that China is planning to boost imports and reach a greater of balance of international payments under the present account.
The Chinese leader's comments come amid escalating trade tensions between Washington and Beijing. In a retaliatory move against America's tariff plans, China has unveiled its plan to impose fresh duties last week on 106 U.S. products, which then resulted in President Donald Trump threatening more duties.
This weekend, the U.S. softened its tone against China. On Sunday, Secretary Steven Mnuchin told CBS that a full-out trade war between the U.S. and China is not seen to take place. On the same day, Trump said that he will always have friendly ties with President Xi no matter the consequence of their trade conflict. He also said that China will roll down its Trade Barriers because it is the proper action to take.
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