USA
Stocks ended higher last week despite volatility driven by economic and earnings data. Small-cap stocks outpaced large-caps, with the Russell 2000 Index returning to slightly positive territory for the year. Apple’s strong earnings report and announcement of a historic share buyback contributed to positive sentiment. Tesla surged following news of tentative approval for its self-driving technology in China. The week saw a mix of economic reports, including a cooling labour market and signs of easing wage pressures, which helped alleviate concerns about stagflation. Federal Reserve Chair Jerome Powell’s remarks after the Fed meeting pushed back against stagflation worries, stating current growth and inflation rates were around 3%.
Europe
Eurozone GDP expanded 0.3% in the first quarter, signalling a recovery from recession. Core inflation slowed to 2.7%, supporting the view that inflation will return to target levels.
European Central Bank policymakers expressed confidence in inflation returning to target by next year, potentially paving the way for lower borrowing costs.
Mortgage approvals reached an 18-month high in March, indicating a recovering housing market. However, the Nationwide Building Society’s house price index fell for the second consecutive month.
China
The Shanghai Composite Index and Hang Seng Index both gained amid hopes of increased government support. The 24-member Politburo pledged to implement prudent monetary and fiscal policies to shore up demand.
April’s official manufacturing PMI was better than expected, marking the second straight month of expansion. However, slowing industrial profits growth signalled ongoing deflationary pressures.
New home sales by China’s top 100 developers slumped 45% in April from the prior year, indicating the ongoing housing downturn’s significant impact on the economy.
Japan
Perceptions of Japanese authorities intervening in foreign exchange markets twice during the week boosted stocks. The yen strengthened against the USD, and the Nikkei 225 Index rose 0.8%.
Solid profit growth for Japan’s large public companies was attributed to various factors, including yen weakness, price hikes, and a rebound in inbound tourism. However, increased competition, particularly in China, posed challenges for some companies.
| Index | Friday’s Close | Week’s Change | % Change YTD |
| DJIA | 38,675.68 | 436.02 | 2.62% |
| S&P 500 | 5,127.79 | 27.83 | 7.50% |
| Nasdaq Composite | 16,156.33 | 228.43 | 7.63% |
| S&P MidCap 400 | 2,929.04 | 33.80 | 5.30% |
| Russell 2000 | 2,035.72 | 33.72 | 0.43% |
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