Indices rallied on Thursday, lifted by Meta which surged after better than expected first quarter results. Reports from Microsoft and Alphabet also showed resilient earnings. The S&P 500 added 0.9% for the week, and also ended April higher, in its second consecutive monthly gain. The Nasdaq rose 1.3% for the week although just managed to scrape a monthly gain, up less than 0.1%.
Despite strength in tech names there was still caution in markets. Financials were a laggard, with a steep sell off in First Republic Bank’s shares having reported that customers had pulled around $100bn in deposits last month. Economic data gave a mixed picture ahead of this week’s Federal Reserve policy meeting. The core personal consumption expenditures price index eased to 4.6% in March, but still remains high, while the preliminary reading of first quarter GDP missed expectations. The yield on the 10-year Treasury note ended lower at 3.451%.
European markets recorded weekly losses as recession fears grew. The pan-European STOXX 600 was down 1.1%, although still managed to see a monthly gain. The eurozone economy grew slightly in the first quarter of 2023, although sentiment was dampened as the German economy was flat for the period. Meanwhile inflation in France and Spain accelerated in April. This will likely keep the pressure on the European Central Bank to raise rate by 0.25 percentage points when it meets this week.
In Japan, the Nikkei 225 was up 1% supported by a dovish Bank of Japan which left its yield curve control policy unchanged. The yen weakened against the dollar after the meeting, while the yield on the 10-year Japanese government bond eased for the week. In China, the Shanghai Composite was up 0.7%, with Beijing reiterating that it would continue its supportive policy stance. Chinese stock markets will be closed until Thursday for the Labor Day holiday.
The Colombian peso weakened against the US dollar for the week, amid political volatility. President Gustavo Petro announced the break-up of the political coalition, later replacing his finance minister and seeing other ministers ousted. The Colombian central bank raised its benchmark interest rate by 0.25 percentage points to 13.25%, although part of the market had been expecting a pause, and this did little to lift the currency.
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