Market Update

It has been a captivating week for global markets, with news sprouting up from various corners!
The week kicked off with the Trump administration's announcement that it would no longer grant oil import waivers to eight countries, including India and China, that were allowed to consume oil from Iran despite the 2018 sanctions. While this caused a spike in Brent Crude prices early in the week, reaching over $74 per barrel, the reaction was largely driven by sentiment. India and China, the two major consumers from Iran, procure only 5% and 6% of their oil from Iran respectively. Although the situation raised concerns, the reality is that these countries can still source oil elsewhere. So, while the oil market reaction appeared sharp, the actual impact on global supply seems limited, making a surge to $100 a barrel unlikely in the near future.
Midweek brought a flurry of news, with India in the midst of its election process conducting its third round of voting. The process is set to conclude in mid-May. In Brazil, the Lower House of Congress declared President Bolsonaro’s crucial pension reform bill constitutional, a significant step towards addressing the country’s deficit. Additionally, Russian President Vladimir Putin hosted North Korean leader Kim Jong-Un, indicating a common interest between the United States and Russia in preventing nuclear proliferation in North Korea. Although specific details were scarce, Putin emphasized preserving North Korea's sovereignty, easing global tensions.
UK Chancellor Phillip Hammond testified to the Treasury Committee for the Spring Statement before flying to Beijing to attend China’s ‘Belt and Road Initiative’ forum. The UK, along with other Western representatives, supports China's long-term trading route plans. Despite differing opinions on the initiative in the West, the momentum gathered by China is pressuring the White House and could facilitate bilateral trade negotiations between the US and China. In his speech at the forum, Chinese Premier Xi Jinping hinted at concessions to the US, indicating a potential trade agreement between the world's largest economies. This development bodes well for markets and long-term global growth.
On the data front, the Bank of Japan kept interest rates unchanged at -0.1% on Thursday. The bank reiterated its ultra-accommodative stance, planning to keep rates low until at least 2020, suggesting that inflation might remain below its 2% target until at least 2022. Japanese jobs data released on Friday showed an increase in the jobless rate to 2.5%, while the 'job to applicant' ratio remained high at 1.63. Japanese retail sales exceeded expectations, but industrial production data missed targets by 0.8%, contracting at a rate of 4.6%.
Friday brought positive news from the US, with first-quarter GDP coming in at 3.2%, beating expectations of 2.3%. Although the figure was somewhat inflated due to supply chain buffering from the last quarter, it signals robust growth, dispelling immediate concerns of a recession. Additionally, Disney's Avengers: Endgame hit the screens, providing a satisfying conclusion for fans who eagerly awaited this 3-hour epic after the frustration of the first installment's cliffhanger ending!