United States
The US stock market experienced a downturn over the past week, influenced by concerns over Middle Eastern conflicts and persistent inflationary pressures, which led to an increase in long-term Treasury yields. Here's a detailed breakdown:
- Large-cap stocks outperformed small-caps, with the Russell 2000 Index noting a significant drop, marking its largest daily decline in nearly two months.
- Growth stocks fared better compared to value stocks, especially those in interest rate-sensitive sectors like real estate investment trusts (REITs), regional banks, housing, and utilities.
- Consumer Price Index (CPI) data indicated a steady rise in headline prices, with notable increases in medical services and transportation services costs.
- Supercore inflation, which excludes energy and housing costs, saw a substantial jump, leading to a shift in Federal Reserve rate cut expectations.
- Despite a pullback in stocks at week's end due to geopolitical tensions, the corporate bond market remained robust.
Market Indexes changes:
- DJIA: 37,983.24 (-920.80)
- S&P 500: 5,123.41 (-80.93)
- Nasdaq Composite: 16,175.09 (-73.43)
- S&P MidCap 400: 2,899.72 (-89.44)
- Russell 2000: 2,003.17 (-60.30)
Europe
European markets saw a mix of performances with the UK's FTSE 100 Index standing out with gains, while other major indexes like Germany's DAX, France's CAC 40, and Italy's FTSE MIB faced declines. Key highlights include:
- A weaker British pound helped the FTSE 100, which includes many multinationals with significant overseas revenue.
- Government bond yields in France, Germany, and Italy spiked following the US inflation report but receded as the European Central Bank (ECB) hinted at potential rate cuts.
- The ECB maintained its deposit rate but suggested a possible reduction in monetary policy restriction come June.
- UK GDP showed growth, exiting recession, with contributions from a rebound in manufacturing output.
Japan
Japanese stock markets gained, influenced by the yen's position near a 34-year low and speculation around potential government intervention. Key points include:
- The Nikkei 225 Index and the broader TOPIX both saw increases.
- Despite the yen weakening further, no government intervention was announced.
- The Bank of Japan (BoJ) maintained its stance on not responding to yen weakness with a rate hike, focusing instead on wage and price rises.
China
Chinese stock markets declined, with inflation data highlighting ongoing demand concerns. Noteworthy developments include:
- The Shanghai Composite and CSI 300 indexes both fell, while the Hang Seng Index remained nearly unchanged.
- Consumer and producer price indices indicated weaker than expected inflation, suggesting subdued economic activity.
- Trade data for March showed significant declines in both exports and imports, pressuring the government to increase stimulus measures.
Other Key Markets
Poland and the Czech Republic both reported inflation trends that could influence future central bank decisions. Highlights for each country are as follows:
- Poland: Inflation continued its downward trend, with March figures falling below expectations. Despite this, rate cuts seem unlikely within the year.
- Czech Republic: With inflation aligning with the central bank's target, further rate reductions may be on the horizon.
