Maersk loses over $717 million to Russia in the first quarter

RIYADH: The US Federal Reserve is expected to hike interest rates as it fights inflation levels, while the Reserve Bank of India hiked interest rates by 40 basis points for similar reasons.

According to the S&P Global Purchasing Managers’ Index, Russian manufacturing activity contracted for the third straight month in April, while Italy and France saw service activity growth.

Germany’s exports fell more-than-expected in March, while Spain’s unemployment fell 2.77 percent to 3.02 million in April.

Australian retail sales accelerated in the first quarter

Australian retail sales in March slightly beat forecasts for a third straight month as spending built a burst of steam that should help weather this week’s rise in interest rates.

Data from the Australian Bureau of Statistics showed retail sales rose 1.6 percent to a record A$33.6 billion ($23.9 billion) in March, beating forecasts of 0.6 percent.

That came after strong gains in January and February, pushing sales up 9.4 percent year-on-year.

While some of that spending would have been offset by rising inflation, it still points to a positive quarter for economic growth.

“Even allowing for a sharp rise in retail prices, we estimate volumes are up a solid 1.5 percent qoq,” said Marcel Thieliant, senior economist at Capital Economics.

“While falling consumer confidence poses downside risks amid rising inflation and interest rates, we believe the still high savings rate will allow for further solid spending increases in the coming quarters.”

The Fed expects to intensify the inflation battle with a large rate hike

The US Federal Reserve is expected to hike interest rates by half a percentage point and announce the start of trimming its $9 trillion balance sheet as central bankers step up efforts to curb high inflation.

Fed policymakers have widely telegraphed a two-pronged decision that would raise the Fed’s short-term interest rate to a range of 0.75% to 1% and embark on a plan to trim its portfolio of Treasuries and mortgage-backed securities by 5%. to reduce a lot $95 billion per month.

The policy statement is scheduled to be released at 18:00 GMT after the end of the Fed’s last two-day meeting.

Markets have priced in more rate hikes this year and next, including at least a few more half-a-point hikes, as traders bet the central bank will react much faster than it expected in March to bid up borrowing costs to drift to where they will begin to actively contain inflation.

With no new Fed economic or interest rate forecasts due until the central bank’s June meeting, most of the clues as to how far and how fast it is willing to go will come from Fed Chair Jerome Powell’s press conference.

Russian manufacturing activity contracted again in April

Russian manufacturing activity contracted for the third straight month in April, buoyed by further declines in output and employment, albeit at a slower pace than the previous month, a business survey showed on Wednesday.

The S&P Global Purchasing Managers’ Index rose to 48.2 from 44.1 the previous month, staying below the 50.0 mark, which separates expansion from contraction.

The survey did not mention Ukraine, but S&P Global said the sanctions had weighed on customer demand and companies’ ability to source commodities.

Western nations have imposed unprecedented sanctions on Moscow over Russia’s actions in Ukraine.

“Logistics delays and material shortages resulted in longer input lead times, with April recording the third-largest increase in lead times for suppliers in 25-year survey history,” S&P Global said in a statement.

The outlook was bleak, impacted by expectations of lower consumer spending power. Stronger import substitution and hopes for a longer-term improvement in economic conditions kept the reading for future production above the 50.0 mark, but the level of optimism was at the second lowest in 23 months.

“Production expectations have historically been muted amid concerns about the impact of sanctions on future demand and new orders,” S&P Global said.

French services activity in April grew at its strongest in over four years

France’s dominant services sector saw its sharpest surge in activity in more than four years in April as fewer COVID-19 restrictions buoyed businesses, although inflation remained a concern, a survey showed on Wednesday.

S&P Global said its final services PMI came in at 58.9 last month, up from 57.4 in March and broadly in line with a flash estimate.

Any value above the 50 point mark indicates growth. The final services PMI figure for April was the highest in any month since January 2018.

A final April read of France’s composite PMI index, which includes both services and manufacturing sectors, meanwhile, rose to 57.6 from 56.3 in March, broadly in line with an earlier flash forecast.

“April was another positive month for France’s services companies as business activity in the largest sector of the economy expanded at the fastest rate in over four years,” said Joe Hayes, senior economist at S&P Global.

“The economy is still benefiting from reduced COVID-19 restrictions as many companies have linked strong and sustained growth in their order books to the recovery from the pandemic.”

Italian service activity expands in April on stronger demand

Italy’s services sector expanded in April at the fastest pace since November, a survey showed on Wednesday, raising hopes for economic growth prospects in the second quarter amid reports of stronger domestic and external demand.

S&P Global services PMI rose to 55.7 in April from 52.1 in March, further surpassing the 50 level, which separates growth from contraction.

The reading beat the median forecast of 54.5 in a Reuters poll of 14 analysts.

The services new business sub-index jumped to 56.0 in April from 52.6 in March.

Italy’s service sector has taken longer to recover from the COVID-19 lockdowns than the smaller manufacturing sector, which has been growing for almost two years.

The manufacturing purchasing managers’ index posted its 22nd straight month of expansion in April, although growth slowed month-on-month.

German exports fall more than expected in March

German exports fell a more-than-expected 3.3 percent in March while imports rose 3.4 percent, according to data released by the Federal Statistics Office on Wednesday.

A Reuters poll had forecast a monthly export decline of 2.0 percent.

Exports to Russia fell 62.3 percent in March from February, partly due to sanctions imposed as a result of the war in Ukraine, the bureau said in a statement.

In March, Germany had a seasonally adjusted trade surplus of 3.2 billion euros ($3.4 billion), the office reported, versus a forecast of 9.8 billion euros.

The number of unemployed in Spain in April fell by 2.77 percent to 3.02 million compared to March

The number of jobless registrations in Spain in April fell 2.77 percent from March, or 86,260 people, putting 3.02 million people out of work, Labor Ministry data showed on Wednesday.

Spain added 33,244 net jobs during the month, separate Social Security Ministry data shows.

The data marks the third straight month of falling unemployment figures and the lowest month-long unemployment figure for April since 2008, the ministry said.

Poland’s central bank hikes interest rates by 100 basis points to fight inflation

Poland’s National Bank is expected to make its second straight 100 basis-point hike on Thursday, a Reuters poll showed, raising borrowing costs to 5.5 percent as it grapples with the highest inflation in nearly a quarter-century.

Consumer price inflation rose above analysts’ estimates, hitting 12.3 percent in April, according to a flash estimate by the statistics agency.

UK consumer and mortgage lending rise again in March

British consumer credit rose solidly in March and mortgage lending hit its highest level since September as house prices rose, according to Bank of England data, which showed no early signs of the economy being hurt by the country’s falling cost of living.

Lending to consumers rose by a net £1.3 billion ($1.6 billion) as expected in a Reuters poll of economists and after rising nearly £1.6 billion in February.

Credit card loans accounted for more than half of March’s increase, which came ahead of a sharp rise in energy costs and a tax hike in April.

The BoE reported £7 billion in net mortgage lending, up from £4.6 billion in February, and 70,961 mortgage approvals, down slightly from the previous month but still well above pre-pandemic norms.

The UK property market maintained much of its momentum in the early months of 2022, despite the phasing out of temporary tax breaks for property purchases in the second half of 2021.

The BoE is on the lookout for signs of how quickly rising inflation is affecting the economy as it considers how far it needs to raise interest rates. The central bank is expected to raise interest rates to 1.0 percent from 0.75 percent on Thursday

India’s Cenbank raises interest rates by 40 basis points to tame inflation

The Reserve Bank of India’s monetary policy committee surprisingly hiked interest rates by 40 basis points on Wednesday as it sought to take calibrated steps to end the extraordinary adjustment and curb rapid inflation.

The MPC raised the policy rate, or repo rate, by 40 basis points to 4.40 percent, Gov. Shaktikanta Das said in a virtual address, announcing the decision after an off-cycle committee meeting on May 2-4.