Good morning! Here’s what you need to know in markets on Thursday.
Chancellor Philip Hammond used his first budget to drive home the message that the British economy remains resilient despite the vote to leave the European Union last June, and reaffirm the government’s commitment to lowering taxes for corporations operating in the UK. “From April this year, it [Corporation Tax] will fall to 19%, the lowest rate in the G20. In 2020 it will fall again to 17%,” Hammond said.
The most controversial portion of Hammond’s budget related to an increase in National Insurance for self-employed workers. Hammond announced a hike in the amount of national insurance Britain’s self-employed must pay, aiming to raise an extra £145 million for the Treasury by 2021-2022 in doing so. The chancellor said the announcement was helping to create what he called a more “fair and sustainable” tax system for the UK.
The European Central Bank’s governing council holds its monthly meeting on Thursday, with little movement expected on monetary policy. “Monetary policy should be unchanged. The ECB announced in December that it would reduce purchases to EUR 60bn per month starting in April and we expect them to acknowledge that the macroeconomic environment has indeed improved sufficiently to allow them to do that,” JPMorgan Asset Management’s Vincent Juvyns wrote on Wednesday evening.
Both front-month WTI and Brent crude futures tumbled by around 5% overnight, leaving them sitting at lows not seen since mid-December last year. The percentage decline in WTI was the largest since February 9 last year. For Brent, it was the largest since June 24, 2016 — the day after the UK Brexit vote.
Futures traders are fully convinced that the US Federal Reserve will raise interest rates at its March 14-15 meeting. On Wednesday, Bloomberg’s World Interest Rate Probability reflected a 100% probability of a hike next week. The Federal Open Market Committee is expected to increase its benchmark fed funds rate by 25 basis points to a range of 0.75%-1%.
Autumn 2018 would be a “common sense” date for any second Scottish independence referendum, Scotland’s First Minister Nicola Sturgeon said in an interview with the BBC. Sturgeon said she would take things forward at “the pace that I think is right for the country” but no final decision had yet been made on holding such a vote.
Centrist Emmanuel Macron would come out ahead of far right leader Marine Le Pen in the first round of France’s presidential election before going on to win a runoff vote against her, a Harris Interactive poll showed on Thursday. Macron would win 26 per cent of the vote in the April 23 first round followed by Le Pen with 25 per cent, the poll showed, the second so far to give the popular former economy minister a first round lead.
China’s producer price index (PPI) rose by a more-than-expected 7.8% in February from a year earlier, the fastest pace since September 2008, the National Bureau of Statistics said on Thursday. Economists had expected producer price inflation to quicken to 7.7%, from the previous month’s 6.9%, as prices of industrial commodities such as iron ore and steel continue to climb.
The leader of South Korea’s Samsung Group conglomerate, Jay Y. Lee, on Thursday denied all of a special prosecutor’s charges against him, the Yonhap news agency cited his lawyer as saying at the opening of a hearing against him. Court proceedings for the trial of Lee on bribery, embezzlement and other charges, began amid a corruption scandal that has rocked South Korea and led to the impeachment of the president.
In a Wednesday-morning interview, US Commerce Secretary Wilbur Ross told Bloomberg the US had been “in a trade war for decades.” “We’re in a trade war,” he told Bloomberg in the televised interview. “We’ve been in a trade war for decades. That’s why we have the deficit.”