This week

The story goes that Margret Herrick, the Academy of Motion Picture Arts and Science’s first ever librarian, remarked sometime in the 1930s that the golden statuette handed out to acknowledge outstanding moviemaking “resembled her uncle Oscar”. The name stuck, and only a few years later it became the official term for the awards ceremony.

Whilst Hollywood’s show piece made the headlines for all the wrong reasons on Sunday, it was the oil market that was taking the real hit. News of an enforced lockdown in China's financial hub of Shanghai to contain surging COVID-19 cases not only dragged down Chinese shares but also hit oil prices hard. Brent plummeted 9.1% to $109.70 as traders evaluated the chances of a city of 26 million people being able to contain the outbreak.

A further hit was to come for black gold later on in the week, following news on Wednesday that the United States was considering releasing up to 180 million barrels from its strategic reserves as part of a move to lower fuel prices. Even the mere mention of the measure was enough to drag prices down another 6%, to sit at $101.4 per barrel, close to 30% lower than where it was just a few weeks ago.

Although the fall in oil prices helped beleaguered investors fretting over inflation slightly, little solace could be taken. Whilst euro zone bond yields dipped a little on Thursday, they were still set to end March suffering one of their biggest selloffs in years, with German Bund yields on track for their biggest monthly jump since 2009. To confound issues, data released on Thursday showed inflation in Italy hit 7% while prices in France were up 5.1%.

One of the main actors for market movements this week was the US yield curve, briefly inverting, a phenomenon often taken as a sign of impending recession within the next 18 months. With the yield on the two-year Treasury note was higher than that of the benchmark 10-year note, a sign that conditions could deteriorate further in time, causing investors to buy longer dated bonds and sell shorter dated issues as central banks look to hike rates aggressively.

In what was to be the worst quarter for stock market returns since the outbreak of the pandemic in q1 2020, markets failed to take their lead from stronger than expected domestic quarterly GDP readings, coming in at 1.3%, against consensus estimates of 1%.

As movie goers will tell you, sequels can be a bit hit or miss and with the second quarter beginning on Friday, US non-Farm Payrolls, a key piece of data for the US central bank, came in with mixed reviews. The US economy added 431,000 during March, slightly lower than 492,000 expected. However, Average hourly earnings crept up by 0.4% as expected with the unemployment rate now dropping to 3.6% the gains were broad based, with the leisure sector the star performer, still recouping many of the losses experienced during the pandemic.

Next week

The first full week of April brings with it the end of the tax year on Tuesday, a time for hastily completing tax returns and filing statements.

However, there will be one statement on Monday that will be of particular interest to economists, as Deputy Governor of the Bank of England, Jon Cunliffe addresses the European Economics & Financial Centre, in London. The bank’s Monetary Policy Committee members vote on where to set the nation's key interest rates and their public engagements are often scrutinised for any hints as to future rate policy. The talk should take on added significance as during the last vote on whether to raise rates, Mr. Cunliffe was the only member of the nine to vote for a 0.5% hike rather than 0.25%.

The following day will see investor attention shift to the continent as a slew of PMI data, detailing performance of the European services sectors is released. The data will be split out amongst component parts of the bloc, with Germany and France’s readings potentially having the largest impact on markets, alongside a collated version of the data for the Eurozone as a whole.

As the sun sets on another week, it is off to the land of the rising sun, to gain more of a handle on the consumer is feeling in Japan. Friday will see a Japanese Consumer Sentiment survey released that interviews about 5,000 households, asking respondents to rate the relative level of economic conditions including overall livelihood, income growth, employment and climate for major purchases. The surveys are often key in predicting future spending trends as well as potential inflation.

The information in this blog or any response to comments should not be regarded as financial advice. If you are unsure of any of the terminology used you should seek financial advice. Remember that the value of investments can go down as well as up, and could be worth less than what was paid in. The information is based on our understanding as at 01 April 2022.