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CHINA SERVICE SECTOR CONTRACTS SHARPLY AS VIRUS CONTAINMENT STEPS TIGHTEN



China's service sector contracted notably in March as the recent rise in COVID-19 cases and restrictions to limit the spread of the virus led to a marked drop in activity, survey results from S&P Global showed on Wednesday.

The Caixin services Purchasing Managers' Index fell to 42.0 in March from 50.2 in February. This was the steepest fall since the initial onset of the pandemic in February 2020. Total new work decreased at the fastest pace since March 2020.

Pandemic-related restrictions, notably those on mobility, were frequently attributed to lower customer numbers and softer demand conditions.

Staffing levels fell in March but the pace of reduction was only fractional. At the same time, disruption to business operations led to a further increase in the level of outstanding business.

There was a stronger rise in input costs faced by services companies. The rate of inflation was solid overall and quicker than the series average.

Although fees charged by services companies rose slightly, the rate of increase was the softest seen in the current seven-month period of inflation.

When assessing the 12-month outlook for business activity, Chinese services companies were generally upbeat that output would expand over the next year. However, the degree of optimism slipped to its lowest for 19 months.

China's overall private sector activity shrank the most since the initial onset of the pandemic in February 2020.

The composite output index fell to 43.9 in March from 50.1 in the previous month. The reading reflected renewed falls in both manufacturing and services activity, with the latter noting the faster rate of decline.

"At present, China is facing the most severe wave of outbreaks since the beginning of 2020, Wang Zhe, a senior economist at Caixin Insight Group said. Uncertainty also increased abroad.

The outcome of the war between Russia and Ukraine is uncertain, and the commodity market has convulsed, Wang added. Several factors have aggravated the downward pressure on China's economy and underscore the risk of stagflation.

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EUROPEAN ECONOMICS PREVIEW: GERMANY INDUSTRIAL PRODUCTION DATA DUE



Industrial production from Germany and house prices from the UK are due Thursday, headlining a light day for the European economic news.

At 2.00 am ET, Destatis releases Germany's industrial production data for February. Economists forecast output to fall 0.2 percent on a monthly basis, in contrast to the 2.7 percent increase posted in January.

In the meantime, UK Halifax house price data is due for March. House prices had climbed 10.8 percent annually in February.

Also, industrial production data from Norway is due at 2.00 am ET.

At 5.00 am ET, Eurostat releases eurozone retail sales data for February. Sales are expected to grow at a faster pace of 0.6 percent on month after rising 0.2 percent in January.

At 6.00 am ET, consumer price data is due from Ireland.

At 7.30 am ET, the European Central Bank publishes the account of the monetary policy meeting of the Governing Council held on March 9 and 10.

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INDIA CENTRAL BANK KEEPS RATE UNCHANGED



India's central bank left its key interest rate unchanged, as widely expected, and maintained its accommodative stance.

The Monetary Policy Committee of the Reserve Bank of India, led by Governor Shaktikanta Das, unanimously decided to retain the policy repo rate at 4.00 percent. The reverse repo rate was left unchanged at 3.35 percent.

The marginal standing facility rate and the bank rate remained unchanged at 4.25 percent.

The central bank today downgraded its growth outlook for the fiscal year 2022-23 to 7.2 percent from 7.8 percent.

At the same time, the bank raised its inflation forecast for the current fiscal year to 5.7 percent from 4.5 percent.

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EUROPEAN ECONOMICS PREVIEW: UK GDP DATA DUE



Monthly GDP data from the UK is due on Monday, headlining a light day for the European economic news.

At 2.00 am ET, the Office for National Statistics releases UK GDP, industrial production and foreign trade data for February. The UK economy is forecast grow 0.3 percent month-on-month, after rising 0.8 percent in January.

The UK visible trade deficit is seen narrowing to GBP 20 billion in February from GBP 26.5 billion in January.

In the meantime, Statistics Norway issues consumer and producer prices for March. Inflation is expected to rise to 5.0 percent from 3.7 percent in February.

At 3.00 am ET, consumer price data is due from the Czech Republic. Economists forecast inflation to advance to 12.4 percent in March from 11.1 percent in February. Also, unemployment and current account figures are due from Turkey.

At 8.00 am ET, the UK NIESR monthly GDP tracker is due for March.

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UK UNEMPLOYMENT DECLINES; JOB VACANCIES AT RECORD HIGH



The UK unemployment declined in three months to February and job vacancies rose to a new record high, the Office for National Statistics said Tuesday.

The jobless rate fell 0.2 percent points from the previous quarter to 3.8 percent in three months to February. The rate came in line with expectations.

At the same time, the employment rate was largely unchanged at 75.5 percent, but remained below the pre-pandemic level.

The number of job vacancies rose to a new record 1,288,000 in January to March period. However, the rate of growth in vacancies continued to slow down.

In March, payrolled employment showed a small monthly growth of 35,000 to a record 29.6 million, data showed.

Average earnings including bonuses, grew 5.4 percent annually in three months to February. Excluding bonus, average earnings was up 4.0 percent. Both rates matched economists' expectations.

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FRANCE TRADE GAP WIDENS IN FEBRUARY



France's trade deficit increased in February on falling exports, data from the customs office showed on Tuesday.

Another official data showed that the current account deficit narrowed in February.

The trade deficit widened to EUR 10.3 billion from EUR 7.96 billion in January. In the same period last year, the shortfall was EUR 5.35 billion.

Exports dropped 3.9 percent on month, while imports grew 0.8 percent.

On a yearly basis, exports and imports were up 18.1 percent and 27.9 percent, respectively.

The current account deficit narrowed to EUR 1.1 billion in February from EUR 1.3 billion in January, the Bank of France reported.

The deficit on trade in goods increased slightly to EUR 6.8 billion, while the surplus on trade in services rose marginally to EUR 4.9 billion.

The financial account showed net capital inflows of EUR 18.6 billion in February.

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US stock market closes higher, Dow Jones gains 1.01%

At the close on the New York Stock Exchange, the Dow Jones rose 1.01%, the S&P 500 index rose 1.12%, the NASDAQ Composite index rose 2.03%.

The leading gainer among the components of the Dow Jones index today was Boeing Co, which gained 6.59 points or 3.74% to close at 182.87. Walmart Inc rose 3.99 points or 2.60% to close at 157.22. American Express Company rose 4.05 points or 2.31% to close at 179.59.

The biggest losers were JPMorgan Chase & Co, which shed 4.24 points or 3.22% to end the session at 127.30. The Travelers Companies Inc rose 1.23 points (0.67%) to close at 183.71, while 3M Company gained 0.08 points (0.05%) to close at 148. .66. Leading gainers among the S&P 500 index components in today's trading were American Airlines Group, which rose 10.62% to 18.95, Gap Inc, which gained 8.23% to close at 14.46, and shares of Host Hotels & Resorts Inc, which rose 8.12% to end the session at 19.70.

The biggest losers were AbbVie Inc, which shed 4.19% to close at 158.95. PayPal Holdings Inc fell 2.85% to 105.17.

Leading gainers among the components of the NASDAQ Composite in today's trading were Kaleido Biosciences Inc, which rose 75.06% to hit 0.30, Antares Pharma Inc, which gained 49.20% to close at 5.58, and also shares of Veru Inc, which rose 42.86% to close the session at 14.30.

The drop leaders were NanoString Technologies Inc, which shed 33.63% to close at 21.87. Shares of Polarityte Inc lost 30.84% and ended the session at 0.27. Quotes Crown Electrokinetics Corp. decreased in price by 19.63% to 1.31.

On the New York Stock Exchange, the number of securities that rose in price (2463) exceeded the number of those that closed in the red (778), while quotes of 110 shares remained practically unchanged. On the NASDAQ stock exchange, 2,913 companies rose in price, 955 fell, and 226 remained at the level of the previous close.

Shares of Antares Pharma Inc surged to a high of 49.20% or 1.84 points to close at 5.58. Veru Inc surged to a 52-week high, up 42.86% or 4.29 points to close at 14.30.

The CBOE Volatility Index, which is based on S&P 500 options trading, fell 10.06% to 21.82.

Gold futures for June delivery added 0.10%, or 1.90, to $1.00 a troy ounce. In other commodities, WTI crude for May delivery rose 3.72%, or 3.74, to $104.34 a barrel. Futures for Brent crude for June delivery rose 4.09%, or 4.28, to $108.92 a barrel.

Meanwhile, on the Forex market, EUR/USD rose 0.58% to hit 1.09, while USD/JPY edged up 0.24% to hit 125.64.

Futures on the USD index fell 0.39% to 99.90.

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CHINA HOUSE PRICE DATA DUE ON FRIDAY



China will on Friday release March figures for its house price index, headlining a light day for Asia-Pacific economic activity. In February, house prices were up 2.0 percent on year.

Finally, several of the regional markets are closed for Good Friday, including Australia, New Zealand, Singapore, Hong Kong and Indonesia - while Thailand remains shuttered for the Songkran Festival.

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Bitcoin (BTC) will not fall below $24,500



Bitcoin is declining for the second week in a row under the influence of the negative dynamics of the stock market. The main decline in BTC last week occurred on Monday against the backdrop of a noticeable drawdown in US stock indices.

The leaders of the world's largest crypto exchanges, interviewed by CNBC, said that they have recently noticed signs of a "crypto thaw", expressed in a changing attitude towards cryptocurrencies from governments.

The Central Bank of Portugal granted the bank the country's first license to work with crypto assets. Bison Bank has become the first bank in Portugal to offer custody and trading services for cryptocurrencies for large clients.

Tesla CEO Elon Musk said recently that he intends to buy Twitter. Cardano founder Hoskinson suggested that Musk join forces to create a decentralized social network if Twitter refuses the deal.

The 12th DOGE cryptocurrency will become the most used cryptocurrency for online payments, said Robinhood CEO Vlad Tenev. However, to do this, developers must increase the speed of transaction processing.

The Ministry of Finance of the Russian Federation finalized the draft law on mining and circulation of digital assets. The government of the Russian Federation submitted to the State Duma a draft law on the taxation of digital assets by three types of taxes.

The creator of the Stock-to-Flow (S2F) model PlanB believes that bitcoin will no longer fall to $24,500. His optimism regarding the asset remains unchanged. According to PlanB, BTC could reach $100,000 by the end of the year.

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Digital Yuan: checkmate for USD in the next 50 years



The cryptosphere is invading most sectors of the global economy, primarily financial. Virtual money is being developed in a number of countries. China has become the leader in this issue, where the crypto yuan is being tested. At the moment, China's digital money is looking for ways to compete with American ones.

Currently, China's virtual currency, known as the digital yuan (e-CYN or e-yuan), is under development. The electronic means of payment is issued by the People's Bank of China (PBC). Now the digital version of China's fiat currency is being tested in 20 cities of the country. This year, China's electronic money became available for use by foreigners for the first time.

The development of the innovative currency of the People's Republic of China did not attract much attention, because "it was in the shadow of the Russian-Ukrainian conflict," said Kyle Bass, manager of the hedge fund Hayman Capital Management. According to the analyst, the release and introduction of crypto yuan is "the biggest threat to the West over the past 50 years." Bass urges markets not to ignore this fact, but, if possible, to create a similar financial instrument capable of reflecting the negative impact of e-CYN.

According to the investor, the full-fledged introduction of Chinese digital money outside the country will lead to the collapse of the world economy. In such a situation, Beijing will be able to attract certain groups of foreigners and convince them to use e-CYN. These include citizens who are experiencing financial difficulties and are prone to corruption. "This gives China the opportunity to bribe everyone and everyone in the world who succumbs to corruption. Such a development threatens national security and leads to digital authoritarianism," says Bass.

The current situation worries American lawmakers who are developing regulatory documents limiting the influence of the digital yuan. In May 2021, members of the American Congress introduced the "Law on Dollars of the XXI century". According to this document, the US Treasury Department should include in the report to Congress any risks to the USD associated with the digital yuan.

This year, this issue has not lost its relevance. In March 2022, Senator Marsha Blackburn and representatives of the Republican Party introduced the "Say No to the Silk Road" law. If it is adopted, the US Department of Commerce will need to report on all transactions with the electronic yuan. The bill also provides for notifying citizens traveling to China "about the dangers of the digital yuan."

The US authorities are concerned about the potential competition of e-yuan with the digital dollar. Against this background, the role of innovative developments of virtual currency has grown dramatically. According to the Atlantic Council think tank, more than 80 countries, including the United States, are planning to issue state-controlled digital assets (CBDC). Earlier, US President Joe Biden stated the exceptional importance of research and development in the field of CBDC. The release of innovative means of payment "meets the national interests," the head of the White House stressed.

According to Bass, the goal of China's global deployment of the electronic yuan is to reduce dependence on the US currency. "The majority of global transactions (87%) carried out by China are conducted in dollars," the investor notes. Against this background, the Chinese authorities have set a course for de-dollarization. One of the ways to overcome it is the introduction of a digital means of payment. Another variant of the anti–dollar strategy is the use of China's fiat currency in trade settlements with some countries, in particular with Russia. Such actions cause serious damage to the USD hegemony, experts believe. However, the full triumph of digital e-CYN is still far away, although the first steps in this direction have already been taken.

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