United States: The week ending April 8 had little economic data releases. The ISM non-manufacturing composite, released on the 5 April, showed a slight decline, falling to 57.3 from 59.7 in February. Despite the first decline in over six months, this index value is still favorable for the economy. Initial jobless claims continued along its downward path, highlighting an improving US labour market. On April 7, initial jobless claims released, measured 382,000; lower than the 392,000 number reported the previous week. For the week of April 11 to 15 economic data pertaining to the US trade balance, retail sales and inflation are expected. The trade balance is expected to narrow marginally, driven by marginally stronger demand for exports in February. Retail sales for March are expected to be moderately weaker than February, though continuing it positive trend In terms of inflation, high commodity prices are expected to push prices higher, a trend we have seen in previous months.
Euro-Zone: The European Central Bank (ECB) raised interest rates by 25 basis points from 1.00 per cent to 1.25 per cent after almost two years, in an attempt to control inflationary pressure. The ECB also raised the marginal lending rate from 1.75 per cent to 2.0 per cent and increased the deposit rate from 0.25 per cent to 0.50 per cent, maintaining a spread of 75 basis points. While ECB President Jean-Claude Trichet stated that the rate increase was "certainly not the start of a series," there is speculation in the market that the rate will increase to 1.75 per cent by year end. China: The Chinese Central Bank raised interest rates for the fourth time this year in an attempt to control inflation and restrain credit expansion. The benchmark one-year lending rate will increase to 6.31 per cent from 6.06 per cent, while the one-year deposit rate rises to 3.25 per cent from 3.00 per cent. Consumer prices jumped 4.90 per cent year on year in February surpassing the government's full-year target of 4.0 per cent.
Peru: The race to be Peru's next president has narrowed to a supporter of greater state control over the economy who once led an army uprising and the daughter of a former leader imprisoned for human rights abuses. Former Peruvian army officer Ollanta Humala, a one-time ally of Venezuela's Hugo Chavez won the most votes in the Andean nation's presidential elections based on preliminary results. He will face in Congresswoman Keiko Fujimori on a 5 June runoff. She finished second, ahead of Pedro Pablo Kuczynski and Alejandro Toledo.
Jamaica: Jamaica's economy contracted 0.9 per cent year on year in 4Q10 resulting in a full-2010 contraction of 1.2 per cent. The GDP contraction in 4Q10 matched the 3Q10 decline, but encouragingly marked the slowest pace of decline over the last nine quarters. Mining surged 20.7 per cent year on year on the back of an increase in alumina production due to the reopening of the Windalco plant and an overall increase in global demand. Hotels and restaurants continued to show marked improvement, up 5.8 per cent year on year, but not enough to stem the decline in the overall services sector.
Credit Rating Changes
Indonesia: Indonesia's long-term foreign-currency rating was increased one level to BB+ from BB, by S&P, with a positive outlook. The rating is now one level below investment grade. The upgrade was based on Indonesia's resilient economy and improving finances.
Brazil: Brazil's credit rating was raised one level by Fitch Ratings, to BBB, the second-lowest investment grade by Fitch Ratings, which cited the economy's growth prospects and budget cuts by President Dilma Rousseff. The outlook is stable.
Portugal: Moody's cut its rating on Portugal's debt for the second time in three weeks. The ratings agency cut Portugal's long term rating to Baa1 from A3. It warned that debt was still under negative review, with further downgrades dependent on the country's ability to secure medium term funding. In a statement, Moody's added its decision was "driven primarily by increased political, budgetary and economic uncertainty, which increases the risk that the government will be unable to achieve its ambitious deficit reduction targets."
Weekly International Equity Watch
The US equity market was generally down during the week ending 8 April 2011, as the S&P 500 index lost 0.35 per cent of its value, closing at 1,328.17. The market received a boost early in the week from speculation that Cisco Systems Inc. will sell or spin off its consumer business. The news spurred a 4.9 per cent increase in the price of the stock. On April 5, the S&P 500 broke its two-day winning streak when the minutes from the Fed's last meeting boosted speculation that central bankers may make an early exit from QE2, which is due to expire in June. By the end of the week, the US equity market extended its loss, with the S&P 500 recording its first weekly decline in two weeks. The poor performance was largely attributed to the sharp increase in energy and fuel costs which pushed transportation shares down and investors' speculation that the federal government may shut down for the first time since 1996.
The market reacted strongly as Democratic and Republican leaders in Congress remained divided over a federal budget hours away from the cut-off time. Both parties came to agreement since then, but this may indicate the battles which may be in store for the Obama administration in upcoming months, as its pushes to raise the debt limit. Year-to-date, the S&P 500 index is up 5.6 per cent.
Asian stocks were generally higher during the week, recording their third weekly gain buoyed by news of takeovers, as well as continued signs of an improving US economy. The MSCI Asia Pacific Index closed the week at 136.54 representing a weekly gain of 0.36 per cent, while Hong Kong's Hang Seng Index climbed 2.5 per cent. The Japanese Nikkei 225 Stock Average also recorded a gain of 0.7 per cent, amid speculation that the damages were limited from the 7.1 magnitude aftershock which struck on 7 April. Additionally, earlier on that day, the Bank of Japan revealed the earthquake lending facility, which also boosted the market. European equity markets received support from news that Portugal sought financial assistance from the EU, as well as the European Central Bank's (ECB) move to increase its benchmark interest rate by 25 basis points to 1.25 per cent from a record low of 1 per cent. The Stoxx Europe 600 Index advanced just under 1 per cent for the week ending 8 April.
Trinidad and Tobago Stock Market
The Composite Index increased marginally during the week ending 8 April, rising by 0.71 per cent to a value of 882.77 as 8 stocks advanced and 5 declined. Republic Bank Ltd (RBL) was the weekly volume leader with 1,502,823 shares trading. Approximately 99 per cent of the RBL shares traded for the week occurred on 6 April. Financial statements were released by Sagicor Financial Corporation (SFC) and Flavorite Foods Ltd (FFL) during the week. The week's top advancer was FFL which price rose TT$0.95 in one day, representing a 14.73 per cent increase, to close the week at TT$7.40. LJWA had the largest decline in price, dropping 14.81 per cent to close at TT$0.54, while trading 10,000 shares that week. Year-to-date the TTSE Composite Index is up 5.64 per cent.
Energy Prices
04-Apr-11 08-Apr-11 Percentage Change (%)
Brent Crude
Oil price (US$/bbl) $120.67 $126.74 5.03
WTI Crude Oil Price
(US$/bbl) $108.47 $112.79 3.98
Henry Hub
Nat Gas Price
(US$, mmbtu) $4.21 $4.06 (3.56)
Source: Bloomberg, First Citizens Investment Service Research Department