Money Minute, Monday 9 March: the Budget, a possible interest-rate cut and news from Korea
This week chancellor Rishi Sunak issues his first Budget, the Bank of England and European Central Bank may consider rate cuts, and the latest data from South Korea could give us clues to the effects of the coronavirus on the global economy.
Good morning and welcome to Money Minute, your comprehensive preview of this week’s biggest financial stories.
Last week, fears about the economic impact of the coronavirus continued to wreak havoc on markets. Government bond yields in the US touched new record lows, as investors bet on the Federal Reserve being forced to cut interest rates even further to cushion the economy against recession. So what does this week hold on the data front?
The biggest event for UK investors next week is the Budget on Wednesday afternoon. The new chancellor, Rishi Sunak, already had a lot on his plate, having been parachuted into the role at the last minute. Now he not only has to lay out the Conservative government’s plans for economic policy for the next few years, but he also has to take into account the impact of the coronavirus, particularly on small and medium-sized businesses.
Following last week’s dramatic emergency rate cuts by both the Fed and the Canadian central bank, investors also expect the Bank of England to announce some sort of action in co-ordination with the government.
Over in the eurozone, a central bank meeting is scheduled for Thursday. Interest rates in the eurozone are already at rock bottom levels, but investors expect at least some sort of action to be taken, simply because the European Central Bank can’t be seen to be doing nothing while all around are cutting rates. New boss Christine Lagarde was probably hoping she’d have more time to ease into the job before crisis struck again – no such luck.
Elsewhere, all eyes will be on Asia for indications as to how the spread of the virus has impacted on activity over there. South Korea, where the rate of infection appears to be levelling out, releases trade data for the first 10 days of March on Tuesday. Imports and exports slid in February, due to China’s factory shutdowns.
The latest data is unlikely to show a dramatic improvement, and may also give an idea of just how big an impact the virus is having on global trade.