March 6, 2018, by Lorcan Roche Kelly
The European Union has drawn up a list of U.S. goods it intends to target should President Donald Trump go ahead with his proposed tariffs on imported metals. The tit-for-tat levy, which would only target $3.5 billion of U.S. goods, seems aimed at sending a political message, with motorbike maker Harley-Davidson Inc., based in Republican House speaker Paul Ryan’s state of Wisconsin, among the targets. White House economic adviser Gary Cohn is organizing a meeting of company executives this week in an effort to change the president’s mind on trade measures. Markets, having sold off when the tariffs were proposed last week, continue their recovery as investors increasingly dismiss the chances of tough talk on imports actually turning into a trade war.
Doves not dead yet
Bank of Japan Governor Haruhiko Kuroda rowed back on remarks made last Friday that seemed to suggest the bank was in line to exit its stimulus program next year. He clarified that he meant the monetary authority would start discussing paring stimulus in 2019 rather than immediately withdrawing accommodation. The Bank of Japan’s next policy decision is due this Friday. In Europe, the doves may remain in control as the European Central Bank meets Thursday, with euro-area growth hitting a speed bump, uncertainty in Italy, and trade frictions all pointing to no change in the central bank’s language on the future of its asset purchase program.
The results of Italy’s election at the weekend leave two sets of nearly-men seeking the right to lead the country, with Matteo Salvini’s anti-migrant League and Luigi Di Maio’s Five Star Movement both claiming a mandate to lead the country while not currently having the votes to win the support of both houses of parliament. With President Sergio Mattarella not likely to pick a nominee to form a government until next month, the country’s troubled economy will have to continue without direction, or much-needed reform for some time yet.
Equity markets around the world are higher again today as investors shrug their shoulders at the apparent rise in political risk. Overnight, the MSCI Asia Pacific Index rose 1.3 percent, while Japan’s Topix index closed 1.3 percent higher with exporters leading the gains. In Europe, the Stoxx 600 Index was 0.7 percent higher at 5:50 a.m. Eastern Time in a broad-based rally. S&P 500 futures added 0.3 percent, the 10-year Treasury yield was at 2.883 percent and gold was higher.
CERAWeek, a five-day gathering of some of the oil industry’s biggest names, kicked off in Houston yesterday. Investors will keep a close eye on today’s address from Amin Nasser, chief executive officer of Saudi Aramco, for any hints as to where and when the company plans to list what would be the world’s largest IPO. In the market this morning, a barrel of West Texas Intermediate for April delivery was trading at $62.75.