“Bitcoin Tops $8000 …”

Bitcoin Tops $8000

As the cryptocurrency’s rally gained momentum, bitcoin surged to more than $8,000 late on Monday, its highest level since July last year.  Bitcoin climbed nearly 17 percent at $8,131 on the Bitstamp Exchange, the largest daily percentage jump since early April.  It hit a high of $8,167.50 which is roughly a 10-month peak.  Although the reason that drove the rally of the bitcoin is not clear, some analysts noted that the tensions arising from the trade war between the US and China, may have helped to boost the demand for Bitcoin and other digital currencies.  They said however that it is too soon to declare bitcoin as a safe-haven asset.  After seven weeks of recovery, Bitcoin sank more than 20 percent on Friday, a move that appeared to have no particular trigger.  On the Bitstamp exchange, Bitcoin fell to as low as $6,178 down 21.6 percent from the precious close and stood down 8.2 percent at $7, 236.

Trade Talks

US and China ramped up their trade conflict and Beijing this week announced new tariffs against US imports after the US ramped up levies on Chinese imports.   Investors had taken some comfort from Trump calling the trade dispute with Beijing “a little squabble” on Tuesday, insisting talks had not collapsed.  The two biggest economies appear at a deadlock.   Washington demands changes to Chinese law, however Beijing says it won’t swallow any “bitter fruit” that harms its interests.  President Trump and his Chinese counterpart Xi Jinping are likely to meet during a G20 summit in Japan at the end of June and discuss trade.

Trump Expected To Delay Tariffs On Autos

US President Trump is expected to delay a decision imposing tariffs on imported cars and parts by months, three Trump administration officials told Reuters.  A formal announcement is expected by Saturday, the due date for Trump to make a decision on recommendations by the Commerce Department to protect the US auto industry from imports on national grounds, said the officials.   Companies such as General Motors, Volkswagen, Toyota Motor Corp and others warned of the damaging impacts of imposing tariffs of up to 25 percent on imported cars and parts.  The industry said that tariffs of up to 25 percent on millions of imported car and parts would add thousands of dollars to vehicle costs and potentially lead to hundreds of thousands of job losses throughout the US economy.   An industry research report which was released last year estimated that US light-duty vehicles prices would increase by $2,750 on average, including US-built vehicles.  This would reduce the annual US sales by 1.3 million units and would force many consumers to the used-car market.

US Retail Sales

US retail sales unexpectedly fell in April as households cut back on purchases of motor vehicles and a range of other goods.  The Commerce Department said on Wednesday that retail sales slipped 0.2 percent last month.  Meanwhile the data for March was revised slightly up to show retail sales surging 1.7 percent, the largest increase since September 2017, instead of the previously reported 1.6 percent jump.  Excluding automobiles, gasoline, building materials and food services, retail sales were unchanged in April after an upwardly revised 1.1 percent acceleration in March.

China’s Retail Sales

China on Wednesday reported weaker growth in retail sales and industrial output for April, adding pressure on Beijing to roll out more stimulus as the trade war with the United States persists.  Overall retail sales posted the slowest increase since May 2003.  This has raised fresh questions about the health of the economy as the US ramps up trade pressure.

Germany’s Economy

Whilst the German economy contracted by 0.2 percent in the third quarter of last year and stagnated in the fourth, the German economy returned to growth in the first quarter of this year as households spent more and construction picked up.   According to Statistics Office growth was mainly driven by construction and increased household spending.  Corporate investments in machinery and equipment also helped, while state spending was slightly negative.  The office will publish more detailed growth data next week which should give more light on which sectors   of the economy contributed to growth and to what extent.   Gross domestic product (GDP) rose 0.4 percent quarter-on-quarter, showed Federal State Office data on Wednesday.   According to economy minister the figures offered a “first ray of hope” following two quarters without expansion, but it was too early to give the all-clear.  The trade war also effects the business of German exporters as both the US and China are important markets.  Furthermore, German exporters are struggling with weaker foreign demand and uncertainty caused by the uncertainty over Brexit.  German government bond yields fell to new 2 1/2year lows and were last down 2.6 basis points at -0.098 percent after the released data from Germany.  Meanwhile US President Trump may also increase tariffs on European car imports, which would impact Germany as well. The German government halved the 2019 growth forecast to 0.5 percent.  This would mark a sharp slowdown after an expansion in 2017 of 2.2 percent and 1.4 percent in 2018.

Brexit

Nearly three years after the UK voted 52 percent to 48 percent to leave the EU, politicians still disagree about when, and how the divorce will take place.  Brexit was due to take place on 29th March, however, May was unable to get the divorce deal ratified by parliament, which rejected the so-called Withdrawal Agreement three times and now the date is set for 31st October.  Theresa May’s spokesman said she was now planning to put forward a Withdrawal Agreement Bill, which implements the terms of British departure, in the week beginning 3rd June to try to secure Brexit before lawmakers go on summer holiday.  By restarting the process to get parliamentary approval for a deal she agreed with the EU in November, May is trying to signal to her own party that she will honour her promise to step down as leader when the agreement is passed.  May who secured her leadership during the chaos that followed Britain’s 2016 vote to the leave the EU, is under pressure from some of her own lawmakers to set a date for her departure.

Italy’s Fiscal Situation

There are fears over Italy’s fiscal situation after Rome said it was ready to break EU fiscal rules to spur employment.  Recently Salvini said that Rome was ready to push the Italian’s budget deficit above the EU’s 3 percent ceiling.  His comments however, came at a time of heightened sensitivity to Italian risk due to the close European elections, the heightened tensions within Italy’s ruling coalition, and the US trade war with China   Italian stocks declined 0.7 percent to lead European stocks lower.  Italian government bond yields surged on Wednesday stoking concerns about high spending.  Short dated Italian government bond yields extended the sharp rise seen on Tuesday after deputy prime minister Matteo Salvini  said that Rome was ready to break EU fiscal rules.  Two-year government bond yields jumped nearly eight basis points in early trade to 0.8 percent which is the highest since December 2018.  The 10 year government bond yield also rose to a new 2 ½ month highs and was last up four basis points on the day to 2.78 percent.

Markets Wrap

Monday, stocks had one of their worst sell-offs in 2019 after Trump late on Friday threatened a new round of round of tariffs on about $300 billion worth of remaining imports from China. The Dow Jones Industrial Average fell 2.38 percent to 25,324.99, the S&P 500 lost 2.41 percent to 2,811.87 and the NASDAQ Composite dropped 3.41 percent to 7,647.02.   Also the US Treasury bond yield between the 3-month and 10 year rates inverted on Monday for the second time in under a week as escalating trade tensions raised concerns that the US economy might fall into a recession.   Markets took a breather on Tuesday after US President Donald Trump called the trade war with Beijing as “a little squabble” and said he would talk to Chinese President Xi Jinping at a G20 Summit in Japan late next month.  Concerns that the trade dispute could impact the global economy has kept investors on edge over the past couple of days, with the benchmark S&P index reached about 4 percent below its all-time high reached two weeks ago.   US stock indexes rebounded on Tuesday as investors snapped up technology shares that took a beating the day before.  On Tuesday Asian shares were pressured by the US-China Trade war, however comments from US President Donald Trump that he expects trade negotiations to be successful eased some worries.  Australian shares finished lower down 0.9 percent while Japan’s Nikkei Stock index closed 0.6 percent lower after touching its lowest level since mid-February.    Asian shares struggled to find their footing on Thursday as confidence was shaken after the US government hit Chinese telecom giant Huawei with severe sanctions.  This further threatened to further strain the US-China trade ties.  European shares were set to open lower.  Meanwhile Japan’s Nikkei lost 0.6 percent while South Korean shares lost 1.1 percent. On Wednesday Wall Street shares extended a rebound with the S&P gaining 0.58 percent and the MSCI broadest gauge of world stocks bouncing back from a two -month low hit on Tuesday.  On Thursday European shares reversed their course to end in positive territory on Thursday as deal-making news in Germany helped to the pan-European benchmark to stop from falling as it overcame fears of an escalation in the US-China trade war.  The STOXX 600 index rose 1.3 percent to a 10-day closing peak, after shrugging off early weakness, triggered by imposition of severe sanctions on Chinese telecoms giant Huawei late on Wednesday.  Germany’s DAX jumped by 1.7 percent for a third consecutive daily gain, however, tariff sensitive automotive shares did not contribute.  The gains in Frankfurt were mainly driven by news of corporate deals.  Asian shares suffered a bout of shakes on Friday amid tough words on trade from China’s media drowned upbeat news on the US economy and corporate earnings.

Currency Roundup

The Australian dollar fell to its lowest level in three months on Wednesday amid grim data from China that increased worries about the global economy.  Weak domestic wage growth figures also dragged.  The Aussie dollar dropped as low as $0.6922 to its lowest level since 3 January when a crash in the foreign exchange markets rocked major currencies.  The Aussie dollar is often seen as a proxy for Chinese growth in view of the Australian’s export-reliant economy as China is the main destination for its commodities.  Meanwhile, the pace of growth in Australian wages stagnated.  On the same day the pound remained near a two-week low, and investors said more looses were likely if Prime Minister Theresa May’s proposed Brexit deal gets voted down again next month.  Sterling has fallen 1 percent this month amid the deadlock cross-party talks.   Weighing on the pound is speculation that May will soon be ousted.  Sterling was trading 0.1 percent higher at $1.2916.  It has fallen for seven -consecutive days against the dollar despite mostly solid economic data from Britain in recent months.  There are concerns that stockpiling by British companies before Brexit will now show up this quarter.  On Wednesday the dollar was steady against its main rivals while the euro won some support from official data showing a rebound in the Germany’s growth for the first quarter.

Commodities

In commodities, US crude futures fell 1 percent to $61.15 per barrel after the American Petroleum Institute (API) reported bigger-than-expected build in crude inventory.  US crude inventories rose by 8.6 million barrels in the week up to 10th May to 477.8 million.  Meanwhile Brent crude lost 0.6 percent to trade at $70.38 per barrel.  Brent and US crude futures had surged the previous day after Saudi Arabia, which is a top exporter said explosive-laden drones launched by a Yemeni-armed movement aligned to Iran had attached facilities belonging to state oil company Aramco.  Meanwhile according to the International Energy Agency on Wednesday, the world will require very little extra oil from OPEC this year as booming US output will offset falling exports from Iran and Venezuela.  The IEA which coordinates the energy policies of industrial nations, said that the decision by Washington to end sanctions waivers that had allowed some importers to continue buying Iranian crude added to the “confusing supply outlook.”    The IEA also said that there was a “modest offset to supply worries from the demand side” as it expected growth in oil demand to be 1.3 million bpd in 2019.  Global oil supply in April fell 300,000 bpd, said the EIA, with Canada, Kazakhstan, Azerbaijan and Iran leading the losses.  However, OPEC crude output rose by 60,000 bpd to 30.21 million bpd, on higher flows from Libya, Nigeria and Iraq, it added.  Oil prices rose on Thursday for the third day in a row as fears of supply disruption due to heightened tensions in the Middle East overshadowed the swelling US crude inventories.  Brent crude futures were at $72.30 a barrel up 53 cents from their last close.  Brent was heading for its biggest weekly rise in six weeks.  Meanwhile US West Texas Intermediate crude futures were at $62.49 per barrel up 47 cents from their previous close.

Malta – Harmonised Index of Consumer Prices (HICP) – April 2019

In April 2019, the annual rate of inflation as measured by the Harmonised Index of Consumer Prices (HICP) was 1.7 percent, up from 1.3 per cent in March 2019.  The largest upward impact on annual inflation was measured in the Restaurants and Hotels Index, while the largest downward impact was recorded in the Education Index.  The HICP measures the monthly prices changes in the cost of purchasing a representative basket of consumer goods and services.

Malta’s Household Composition

In Malta the total number of households with dependent children increased by 12 percent between 2013 and 2017.  Out of a total of 61,255 households with dependent children, 20,412 (33 percent) were households of two adults and one dependent child, whilst households comprising of two adults and two dependent children added up to 16,203 (26 percent).  Meanwhile, the share of single parent household with one or more independent children was 12 percent amounting to 7,307.

Malta – Motor Vehicles First Quarter 2019

Data from Transport Malta shows that at the end of March 2019, the stock of licensed motor vehicles stood at 387,775 an increase of 3.4 percent over the same quarter in 2018.  Out of this total, 77.8 percent were passenger cars while 13.6 percent were commercial vehicles.    In the first quarter of 2019 the stock of licensed vehicles increased at a net average rate of 27 vehicles per day, while newly licensed vehicle put on the road during the same period amounted to 6,526.

Antonella Mercieca

Client Relationship Manager

Source:

Bloomberg, Reuters, https://nso.gov.mt

Date:

May 17th, 2019


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