Markets respond to economic news
April 7, 2012 Leave a comment
Most equity markets retreated this week on mixed economic reports. Although the week started with promising news showing manufacturing expansion, disappointment followed the U.S. Federal Reserve release of meeting minutes indicating economic growth was reducing the urgency for further stimulus. Worries about Europe also took stocks lower.
U.S. factories increased production and hiring in March, while in China, factories also ramped up output. This heightened activity in the world’s two largest economies provided increasing evidence of global growth.
Monthly U.S. jobs data to be released tomorrow when equity markets are closed for the Good Friday holiday, are expected to be positive. Weekly data showed that new claims for unemployment benefits continue to sit near four-year lows.
Meanwhile, Canada’s labour market in March experienced its biggest month of job creation since 2008. The country’s jobless rate fell to 7.2% from 7.4% the previous month. It was an unexpectedly strong gain on the heels of recent lacklustre labour market performance and a positive signal for the economy.
Concerns about Europe, particularly Spain’s rising sovereign debt burden, hurt stocks. An auction of Spanish government debt didn’t go as well as expected, sending Spanish bond yields to their highest level since January. A revised reading of eurozone business activity in March confirmed a contraction and a decline in February retail sales in the eurozone heightened investor concerns. In leaving its key lending rate at a record low 1%, the president of the European Central Bank warned that “downside risks to the economic outlook prevail.”
In other news this week:
- Gold and silver extended their losses of recent weeks, with bullion sinking to a three-month low, as the Fed dashed stimulus hopes.
- Canada’s construction industry saw increased activity in February as the value of building permits jumped 7.5%.
- Major U.S. retail chains reported stronger-than-expected sales in March, a sign of growing consumer appetites.
What’s ahead next week:
- Housing starts, prices.
- International trade data.
- Bank of Canada Business Outlook Survey.
- Consumer price index.
- Fed Beige Book.
- International trade data.
By Brian Dugaro: financial consultant of Nanaimo (BC), passionate about the opportunity to assist people from all walks of life to improve their financial situation and give them confidence to improve their lives. Can be contacted at 250-618-1893.
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