Macro-News round-up:

US: US stock markets seem to be dragging on the disappointment of a higher than expected inflation rate last week, pushing back hopes of near-term rate cuts. S&P 500 closed at 4,780.2, down 0.1%. The NASDAQ closed at 14,970.2, little higher than the DJIA, which increased modestly to conclude at 37,711.0.

Europe: European markets, as usual, followed Wall Street’s trend, and also closed negative. The French CAC40 declined 0.5% to close at 7,387.6, while the German DAX40 slid 0.9% to conclude at 16,547.0.

Deutsche Bank experienced a 4.3% decline following the initiation of disciplinary proceedings by Spain’s stock market supervisor regarding the bank’s provision of advisory services to Spanish clients about extremely complicated and volatile financial derivative instruments related to currencies.

German Economy: According to the Bundesbank’s usual monthly report on Europe’s largest economy, released on Monday, Germany is most likely in recession at the moment due to low external demand, cautious consumers, and high borrowing rates that are impeding domestic investment.

On the other hand, the government has disputed the dire predictions, saying that the situation is simply a perfect storm of high oil prices, poor Chinese demand, and fast inflation that momentarily halts growth without calling into doubt the fundamentals of economic strategy.

Meanwhile, The dollar index seems to be forming a bullish pattern that could take it to 107 points. It would crush the EURUSD pair, perhaps below 1.05.

China: Chinese banks have cut the mortgage reference rate by the largest margin on record. This move is seen as a response to the government’s efforts to support the real estate market and the broader economy. The one-year loan prime rate (LPR) was reduced by 20 basis points to 3.85%, while the five-year LPR was cut by 10 basis points to 4.6%.

The government’s decision to reduce the LPR is consistent with its objectives of maintaining reasonable credit growth and stabilizing the economy. It is anticipated that this large rate drop will lower borrowing costs for buyers and boost the real estate market, which has been weakened by the government’s deleveraging initiative.

After holding a series of seminars with retail and institutional investors, listed companies, and foreign institutions over the past two days, the China Securities Regulatory Commission, led by new chairman Wu Qing, said in a statement that it will take opinions, suggestions, and criticism from all parties seriously and implement the practical and feasible ones immediately.

Middle East: Saudi Arabia is rapidly diversifying to reduce its dependence on the oil sector. Under a strategy known as Vision 2030, the top oil exporter in the world is expediting efforts to diversify its economy away from oil. It seeks to grow the private sector, provide employment, and advance industries like tourism and industry. Last year, non-oil activities significantly outpaced the growth of the oil industry, boosting overall growth that had abruptly halted due to reductions in oil production and lower prices.

Geopolitics: Prior to Hamas’ cross-border assault on southern Israel on October 7, the Israeli economy was predicted to rise by about 3.5% in 2023. The Central Bureau of Statistics reported in an initial estimate of gross domestic product (GDP) opens a new tab that the $500 billion economy shrank annually in the fourth quarter from the previous three months by 19.4%, which was double the rate projected in a Reuters consensus.