14 March 2024
If you are covering the latest news in financial markets, please find below a comment from Lindsay James, investment strategist at Quilter Investors:
“News that the Republican-controlled House of Representatives overnight overwhelmingly passed a bill, with bipartisan support, to enforce the sale of TikTok by parent company ByteDance to an American company, or risk seeing it banned, is likely to trigger a renewed spat between the US and Chinese government in the run up to the presidential election.
“The site is increasingly used for news, leaving it ripe for misuse ahead of the election, and there have been widespread concerns by US politicians about data harvesting by the Chinese government. This would however set an uncomfortable precedent for other foreign-owned entities operating in the US. The message being that if the US government doesn’t approve, expect to experience a forced divestiture – challenging somewhat its image for free enterprise and free speech. With this now moving to the Senate the debate will continue, with diplomatic ties with China likely to be collateral damage amidst this latest turn inwards by America.
“Elsewhere, the recent slight acceleration in headline US CPI, on both an annual and month-on-month basis, has been blamed largely on rising energy prices. The US CPI release on 12 March cited an energy index up 2.3% over the month as a major driver of the headline increase. While volatility in energy prices is stripped out of core figures, longer term trends still indirectly make themselves felt in this number and across the wider spectrum of indicators, as a feed-in cost throughout the manufacturing process and a factor in consumer and business sentiment.
“Volatility in energy prices, in a world where supply is far more balanced than it was prior to the Ukraine invasion, is a major reason why there is so much dispersion in economic forecasts. With Brent crude oil prices yesterday hitting their highest level since November at $84/barrel on the back of a new and highly successful Ukrainian campaign of drone strikes on Russian refineries, in addition to data showing declining US stockpiles, any further tilt in the supply-demand dynamic could push a more substantial inflationary pulse through the global economy in the coming months.”
