USA
Equity markets retreated amid fears of Middle East conflict and persistent inflation pressures, pushing Treasury yields higher. Large-caps fared better than small-caps, with growth stocks outperforming value shares which were weighed down by interest rate-sensitive sectors, such as real estate investment trusts (REITs), regional banks, housing, and utilities. Wednesday’s CPI data showed prices rising by 0.36% in March, in contrast to expectations for a decline.
Supercore inflation, excluding energy and housing costs, jumped 0.7% in March, the biggest increase in 10 months. While producer prices rose 0.2% in March, calming some inflation fears, reports of a possible strike on Israel sent investors flocking to oil and the U.S. dollar, spiking the VIX to its highest level since November.
Europe
Major European stock indexes fell, except for the UK’s FTSE 100 Index, which gained due to the pound’s weakness. Yields on French, German, and Italian bonds initially rose on U.S. inflation data but pulled back as the ECB hinted at a possible rate cut.
UK GDP expanded 0.1% in February, indicating an exit from recession, while investor confidence in the eurozone rose. German industrial production increased for the second consecutive month, driven by construction output.
Yields then retreated from these peaks following the European Central Bank’s (ECB) decision to keep key rates unchanged but strongly suggested a potential decrease in the near future. UK bond yields experienced an increase, partially influenced by the hawkish remarks made by Bank of England policymaker Megan Greene, who cautioned that “rate cuts should not be imminent.”
China
Chinese stocks retreated as weak inflation data highlighted lackluster demand. China’s consumer price index rose 0.1% in March, below expectations, while the producer price index fell 2.8% year-on-year, marking its 18th consecutive month of declines. Trade data showed a worse-than-expected decline in exports and imports in March, reversing gains from earlier in the year.
Japan
Japanese stocks gained as investors awaited government intervention to support the yen, which hovered close to a 34-year low. The 10-year Japanese government bond yield rose to 0.84%, its highest level since November 2023. The yen breached the key JPY 152 level against the U.S. dollar, prompting speculation about intervention. The BoJ ruled out responding to yen weakness with a rate hike, maintaining accommodative monetary policy.
|
Index |
Weekly Index |
Year to Date |
||
|
Currency |
Local |
Sterling Pound |
Local |
Sterling Pound |
|
UK |
|
|
|
|
|
FTSE 100 Index |
1.23% |
1.23% |
4.31% |
4.31% |
|
US |
|
|
|
|
|
S&P 500 Index |
-1.53% |
-0.12% |
6.43% |
8.97% |
|
EU |
|
|
|
|
|
Euro Stoxx 50 |
-1.05% |
-1.38% |
10.77% |
9.11% |
|
Asia |
|
|
|
|
|
Hang Seng Index |
-0.01% |
1.30% |
-2.12% |
-0.04% |
|
MSCI World |
-1.08% |
-0.06% |
6.79% |
7.65% |
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