European-Asian Stocks Soar
European and Asian stocks gained momentum, and the dollar weakened as concerns over widespread banking turmoil eased. France, Spain, and Italy experienced the most significant gains in Europe, while Hong Kong, Japan, and South Korea saw increases in Asian shares. Futures for the US market showed slight gains.
Netanyahu Delays Proposal
Binyamin Netanyahu, the Prime Minister of Israel, agreed to delay a judicial overhaul proposal until parliament meets next month after facing increasing pressure. The decision to pause came to prevent the nation’s division, and Netanyahu reached an agreement with his far-right national-security minister. Thousands of people protested on Sunday following the Prime Minister’s dismissal of the defense minister over opposition to the reforms.
Hungary Ratifies NATO
Hungary’s parliament ratified Finland’s bid to join NATO, paving the way for the country’s entry into the alliance, and Turkey said it would also approve the move by mid-May. However, Sweden’s application remains on hold, as Hungary’s authoritarian government and Turkey, who accuse Finland of supporting Kurdish “terrorists,” oppose its accession.
US-Japan Trade Agreement
The US and Japan are set to sign a trade agreement that covers critical minerals necessary for electric car batteries. The two countries agreed to refrain from imposing export duties on lithium, cobalt, manganese, nickel, and graphite, and will share information on possible labor violations in the supply chain. The deal comes as the Biden administration is expected to release guidelines on how electric car makers can qualify for the maximum tax credit under the Inflation Reduction Act to jump-start clean energy production.
Nashville School Shooting
Six people, including three children and three adult staff members, died after a woman opened fire at a school in Nashville, Tennessee. The incident marked the 13th deadly school shooting in the US in 2023, compared to 51 last year, at a private Christian school that serves students up to the age of 12.
Kim Jong Un Warns on Nuclear Weapons
Kim Jong Un, the leader of North Korea, introduced new, smaller nuclear warheads and called for increased production of weapons-grade nuclear material, warning that his country was prepared to use nuclear weapons “anytime and anywhere.” In March, North Korea conducted seven missile tests, escalating tensions in the region.
UK Food Inflation High
UK food inflation rose to a record high in March, with shortages of fruit and vegetables compounding the challenges for households struggling with the cost of living crisis. Annual food inflation reached 15%, the highest since records began in 2005, with the largest price increases affecting fresh foods, with inflation up to 17%.
Fed to Raise Rates
Despite market fears of a banking crisis, the Federal Reserve will continue to raise interest rates, according to BlackRock Inc. The world’s largest asset manager prefers inflation-linked bonds, believing markets are wrong in anticipating imminent US rate cuts as the economy heads towards a recession. The Fed and its peers have made it clear that banking sector difficulties will not stop their fight against inflation.
Yousaf to Lead Scotland
Humza Yousaf, Scotland’s health secretary, will become the new leader of the Scottish National Party and the country’s first minister, succeeding Nicola Sturgeon. He narrowly defeated Kate Forbes, the finance minister, with 52% of the vote, and vowed to deliver Scottish independence.
Bank Collapse Inquiries
Inquiries into the recent collapse of several mid-sized banks are underway, even as the banking sector remains unstable. The Senate will hold several hearings about the failures of Silicon Valley Bank and Signature Bank, which triggered the recent turmoil. The Federal Reserve, the Treasury, and the Federal Deposit Insurance Corporation will all provide senior officials as witnesses. The Senate will investigate why the banks failed to recognize the impact of fast-rising interest rates on their balance sheets.
Trudeau’s Budget Balancing
Canadian Prime Minister Justin Trudeau faces a tough balancing act as his minority government proposes the country’s new budget on Tuesday. With high inflation putting pressure on households and the NATO urging an increase in defense spending to 2% of GDP, Trudeau’s government will need to make tough choices. The proposed budget is expected to include more money for defense, green technologies subsidies, extra healthcare spending, and tax rebates for low-income earners. However, the significant increase in spending is likely to result in a hefty fiscal deficit.
US Oil Producers Vulnerable
US oil producers have been left vulnerable after cutting back on price hedges this year, expecting energy markets to rally again. The turmoil in the banking sector, triggered by the collapse of Silicon Valley Bank (NYSE:SVB), led to a sell-off in US oil markets. Prices have recovered to around $73 a barrel, but many producers may have to reduce payouts to shareholders or curtail plans to grow output. Rolling back hedges, a form of insurance against commodity market downturns, has left many producers exposed, even after enjoying record profits last year.
China’s Academic Database Access
Access to China’s largest academic database, China National Knowledge Infrastructure (CNKI), is expected to be curtailed from April 1, according to foreign universities and research institutions. Libraries worldwide have received notifications that their access to CNKI will be cut, as the company moves to comply with the law on cross-border services. The move has deepened concerns that researching China will become even more challenging as Beijing tightens data security. At least a dozen institutions have confirmed receiving the notification, but the number of affected institutions is unclear.
AI Disrupts Labor
Goldman Sachs research suggests that “generative” AI systems like ChatGPT could lead to the automation of a quarter of the work done in the US and eurozone. This could trigger a productivity boom that would eventually raise annual global GDP by 7% over a 10-year period. However, the technology’s promise could bring significant disruption to the labor market, exposing the equivalent of 300 million full-time workers across major economies to automation. Lawyers and administrative staff are among the occupations at greatest risk of becoming redundant.
Pay Offer Rejection in UK
England’s largest teaching union has called on its members to reject the government’s latest pay offer, calling it “insulting.” The Department for Education has proposed an average 4.5% pay rise in the next academic year, along with a one-off cash payment of £1,000 this year. However, the National Education Union has rejected the offer, stating that it does not address the recruitment and retention crisis in English schools. The union will ask its members to reject the offer, indicating that the government does not value teachers.