United States
Major indices ended the week lower, with small-caps and growth companies trailing well behind. Within the S&P 500 Index, sector performance was also mixed, with consumer staples and health care stocks showing solid gains however, information technology and communication services showed losses throughout the week, with Elon Musk acquiring a stake in twitter of 9.2%, citing a 27% jump in Twitter shares last Monday.
The Federal Reserve’s strategy and the situation in Ukraine loomed prominently in public opinion. Stocks fell dramatically on Tuesday morning after Federal Reserve Governor Lael Brainard, usually regarded as one of the more dovish policymakers, stated that the Fed would commence lowering its balance sheet to quickly combat inflation.
Equities fell on Wednesday following minutes from the federal reserve that supported a lowering in the central bank’s balance sheet, a reduction of 95 billion which is more than the 80 billion expected by the masses. Minutes also signalled the federal reserve would increase interest rates by another 50 basis points in their upcoming meeting.
The week was relatively slow, proving the global economy’s resilience against looming inflation and how the war in Ukraine has handicapped most economies. Jobless claims fell over the past week contributing to claims rising unexpectedly. The federal reserves’ move to implement quantitative tightening contributed to yields increasing to a high rise in the treasury notes since 2019. Last Friday’s temporary inversion in that area, during intraday trade, stoked fears of an approaching recession. However, the five-year/30-year curve segment remained negatively sloped, which many investors regard to be a recession indicator.
Europe
Concerns over central bank tightening, inflation, and Russia’s invasion of Ukraine prompted a slight rise in European stock prices. The STOXX Europe 600 Index increased 0.57% in local currency whilst other major European stock indexes fell. France’s CAC 40 Index slumped 2.04%, with polls showing President Emmanuel Macron’s advantage over far-right rival Marine Le Pen, who’s decreased significantly. The FTSE MIB Index in Italy was down 1.37%, whilst Germany’s DAX Index was down over the week despite the FTSE 100 Index in the United Kingdom, which made some gains over the week.
Following claims that Russian forces committed war crimes in Ukraine, the European Union (EU) joined the United States in slapping new sanctions on Russia. The EU recommended a ban on Russian coal imports and new machinery exports and sanctions against more Russian oligarchs and President Vladimir Putin’s two adult daughters.
According to the ECB’s March meeting, many officials agreed that the persistence of strong inflation required prompt steps toward normalising monetary policy to avoid a wage-price spiral. As a result, some claimed that the central bank’s asset purchase programme should be phased out by the summer, citing that the requirements for raising interest rates had either been reached or would be met soon. On the other hand, others decided to wait and see, based on the unprecedented level of uncertainty caused by the Ukraine crisis.
japan
Japan’s major stocks fell, with the TOPIX declining 2.44% over the week. Furthermore, an easing of Japan’s border regulations failed to strengthen sentiment amongst traders as the federal reserve maintained a hawkish stance upon citing inflationary pressures stemming from the Russian and Ukrainian tension. Japanese 10-year bonds also rose to 0.23% from 0.21% towards the end of the week, and the Japanese yen was at its weakest level of JPY124.05 over seven years against the US dollar.
With the BOJ governor stating that the weakened currency is beneficial for Japan, he also emphasized that the movement of the currency must be monitored closely with the reflection of economic and financial fundamentals. A weaker yen boosts Japan’s domestic economy as the value of companies increases relative to overseas earnings.
On the other hand, it raises import costs at a time when increasing energy and commodity prices are putting a strain on the economy’s nascent recovery. As a result, the Bank of Japan has maintained its aggressive monetary easing in pursuit of its 2% inflation objective to ensure that price increases are matched by increases in corporate earnings and salaries.
With the IMF decreasing Japan’s economic growth this year, Policymakers have been forced to consider a contingency plan due to the Ukraine crisis and fluctuation in commodity prices. Due to an expected decline in the first quarter, the IMF now expects Japan’s economy to grow 2.4% this year, down from an estimate of 3.3% in January.
China
With Shanghai on a stage two lockdown that commenced in March, several Chinese cities are currently under partial lockdown, demonstrating that 13% of China’s economy is affected. Markets eased as expectations for an aggressive monetary policy by the USA curbed sentiments around traders. As a result, the broad market capitalisation of the Shanghai composite declined 0.94%, along with the CSI 300 falling to a 1.08% point.
10 years yields, on the other hand, fell to 2.806% from an earlier 2.825%, diminishing China’s yield advantage over the United States. In addition, the yuan weakened against the USD because of a narrowing yield gap between the two states. Analysts argued that the yield gap could further narrow, as there could be a tighter monetary policy that might be introduced by the federal reserve.
According to the newest poll released by Caixin on Wednesday, China’s services and factory activities were both severely curtailed in March due to the latest outbreak of COVID-19 cases in several locations across the country. As a result, services stipulated by the Purchasing Managers index plummeted to 42.0 in March from 50.02 in February, showing a monthly growth reduction since the beginning of Covid 19 first break out.
On the other hand, China’s market regulators have proposed amending offshore listing secrecy standards, which might end the country’s long-running disagreement with the United States regarding audit checks for dual-listed companies. China’s Securities Regulatory Commission proposed that the new draft guidelines remove a requirement that on-site inspections be conducted by Chinese regulatory agencies or rely on their inspection reports. This marks a breakthrough in the dispute, which has elevated the prospect of delisting for the 270 Chinese companies listed on the New York Stock Exchange as early as 2024.
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| Weekly Index |
| YTD Index |
|
| Index | Local Currency | Sterling Pound | Local Currency | Sterling Pound |
| UK |
|
|
|
|
| FTSE 100 Index | 0.30% | 0.30% | 3.52% | 3.52% |
| US |
|
|
|
|
| S&P 500 Index | -1.24% | -0.49% | -5.57% | -1.68% |
| Europe |
|
|
|
|
| Euro Stoxx 50 Index | -2.94% | -3.73% | -11.26% | -11.74% |
| DAX 30 | -2.55% | -3.35% | -11.37% | -11.85% |
| Asia |
|
|
|
|
| Nikkei 225 Index | -1.99% | –2.82% | -3.49% | -7.35% |
| Hang Seng Index | -0.76% | -0.07% | -6.19% | -2.86% |
| MSCI Emerging Markets Index | -1.13% | -0.78% | -6.80% | -4.28% |
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