Today, the stock market experienced a rollercoaster ride, with indices trading positively during the day before falling somewhat but ultimately closing in the green. Several key reports were released today, which may have implications for the stock market. Here's a summary of those reports.
The Bank of England raised its key bank rate by 25 basis points to 4.25%, aiming to bring inflation back to the 2% target. Inflation in the UK unexpectedly increased to 10.4% last month, but is expected to decline sharply over the rest of the year. The central bank also noted that the UK banking system remains resilient despite the recent banking crisis. Policymakers will keep a close eye on credit conditions and their impact on the economy and inflation.
In the US, building permits for February were revised higher to a seasonally adjusted annual rate of 1.55 million, the highest reading in five months. Both single-family and multi-segment authorizations were revised higher, with growth observed in all four regions.
The Chicago Fed National Activity Index declined to -0.19 in February from +0.23 in January, with all four broad categories of indicators making negative contributions. However, the three-month moving average improved, indicating that economic activity remains mixed.
The US current account deficit narrowed to $206.8 billion in the last quarter of 2022, the lowest since mid-2021, due to a reduced deficit on secondary income and an expanded surplus on services. For the full year of 2022, the current account deficit widened, reflecting expanded deficits on goods and secondary income.
The number of Americans filing for unemployment benefits fell by 1,000 to 191,000 for the week ending March 18th, indicating a persistently tight labor market. This tightness in the job market may lead to higher wages and increased inflationary pressure, providing more leeway for the Federal Reserve to tighten monetary policy. However, no major wage increases appear to be presenting themselfs, on the other hand a tight labour market gives the FED more leaway to raise rates further.
Lastly, new home sales in the US increased by 1.1% month-over-month in February, reaching the highest level since August of last year. This growth was driven by increases in the West and South regions, offsetting decreases in the Midwest and Northeast.
In summary, today's market activity may have been influenced by these economic reports and how the market has interpreted them. While some factors, such as the tightening labor market, could lead to more aggressive monetary policy, others, like the improvement in new home sales, may provide a more optimistic outlook depending on how you look at it. As always, investors should monitor these developments closely and make informed decisions accordingly.
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