Japan’s stock markets regained some of their recent losses, as the threat of a meltdown at Fukushima Daiichi nuclear plant eased with progress being made on containing radiation leaks. The markets are showing a little more appetite for riskier assets as the G7 intervened in the money markets to relieve the Japanese Yen and allow it to fall to assist exports and permit the country time to recover.
Yesterday we had the release of February’s Public sector borrowing figures which showed the highest borrowing on record for February at £11.8bn. Economists had forecast a borrowing figure of £6.9bn for February. The latest figure released now means public sector net borrowing, is currently standing at £123.5bn for this financial year to date, suggesting that we remain on course to total £149bn for the full financial year.
Consumer prices index annual rate of inflation in the UK increased to 4.4% in February up 0.4% from January’s figures and well above the Bank of England target rate of 2%. Following on from last week’s earnings figures, it continues to show that this is caused by higher fuel, food and clothing costs giving further speculation that the Bank of England will increase interest rates sooner rather than later. This gave Sterling strength and closed just below 1.64 against the US Dollar and 1.1550 against the Euro.
The Chinese Yuan has reached a record high against the US Dollar as Beijing continues to use its currency to try and curb inflation. With oil prices soaring and China being a fuel hungry nation the concern is that of importing inflation.
All eyes will be on the release of the minutes from the last Bank of England meeting and the UK budget. The markets will want to know if any other member voted for an increase in interest rates and also to see how the chancellor handles the delicate balance of austerity versus growth in the budget.
It would appear that Portugal moves ever closer to needing a bailout as the opposition parties withdraw their support for the austerity package. This could lead to the collapse of the government as soon as today.
