By Geoffrey Smith
Investing.com -- The long-awaited spike in inflation rates begins, as price data for March trickle in. Europe's industrial output in March slipped alarmingly. Amazon looks like winning its struggle to avoid unionized labor, and OPEC+ members are pumping more oil than they should. Here’s what you need to know in financial markets on Friday, April 9th.
1. The inflation spike begins
March inflation data out of China confirmed the start of a widely-expected increase in prices, measured in annual terms.
Producer price inflation rose 4.4% on the year, the fastest increase since July 2018 and well ahead of expectations, while consumer price inflation rebounded to 0.4% on the year from -0.2% in February.
The rebound was due largely to base effects caused by the collapse of oil prices a year ago. The same effects are likely to be reflected in U.S. PPI data due at 8:30 AM ET (1230 GMT). Prices are expected to have risen 0.5% on the month and 3.8% on the year.
The Federal Reserve has said repeatedly it expects to ‘look through’ what it expects to be a temporary period of higher-than-usual inflation rates, focusing instead on the pace of repair in the labor market.
2. Europe’s vaccination campaign steps up a gear, unlike its factories
Europe’s sluggish vaccination campaign is showing signs of picking up at last. German Health Minister Jens Spahn tweeted that Europe’s largest economy had distributed 1.375 million vaccine shots in the last two days alone, something that reflects the fact that Germany only this week started allowing general practitioners' surgeries to vaccinate against Covid-19.
The Eurozone’s four big economies have all now vaccinated between 13%-15% of their adult populations, still far less than the U.S. and U.K., but the gap is narrowing. Italy, one of the worst hit countries, will likely relax its restrictions on business and social life a little with a decree later Friday, in response to falling infection rates, Bloomberg reported. Germany, by contrast, continues to flirt with another 'short, sharp lockdown'.
The economic data from Europe remains mixed at best, however. German, French and Spanish industrial production all fell in March, Germany’s missing expectations by the most in a decade. The numbers make a Q1 GDP contraction considerably more likely.
3 U.S. stocks set to march higher as reopening trades regain momentum
U.S. stocks are set to build on Thursday’s record closes at the opening, with quiet bond markets largely unruffled by the gradual reopening of the economy.
By 6:30 AM ET (1030 GMT), Dow Jones futures were up 68 points, or 0.2%, while S&P 500 futures were up 0.1%. Nasdaq 100 futures were down 0.2%, as reopening trades started to gain strength again.
Stocks likely to be in focus later include McDonald’s (NYSE:MCD), which is closing its last restaurants in Walmart (NYSE:WMT) stores, and Walt Disney (NYSE:DIS), whose planned reopening of its Disneyland theme park at the end of the month is gaining increased media coverage, as emblematic of a broader trend across the country.
4. Amazon workers turned off by union
Workers at a major Amazon (NASDAQ:AMZN) warehouse facility in Alabama appear to have rejected plans to form a union, according to preliminary results from the ballot.
With about half of votes counted, those voting against unionization had a lead of over 2:1, according to various reports.
The vote has drawn attention for its potential to set a precedent for Amazon facilities across the U.S. and for service-sector personnel in general, whose precarious economic position has been harshly exposed during the pandemic.
5. Oil drifts as OPEC+ discipline slips
Crude oil prices continue to drift sideways against a backdrop of rising supply and some uncertainty over whether demand is recovering fast enough to absorb it.
A survey by S&P Global (NYSE:SPGI) Platts suggested that production by ‘OPEC+’ members rose by 450,000 barrels a day in March, with Russia and Iraq, the second and third-largest exporters in the group, both pumping above their agreed limits.
Two countries not covered by the agreement, Libya and Iran, are both increasing output too: Iran’s output rose by 130,000 barrels a day to a two-year high of 2.3 million b/d, while Libya pumped 1.19 million, an eight-year high. It plans to pump 1.45 million b/d by year-end.
By 6:30 AM ET, U.S. crude was up 0.2% at $59.69 a barrel, while Brent crude was flat at $63.20.