At the end of the week markets were expecting the central bank to pause, with the weekly initial jobless claims data hitting its highest level since October 2021. It was notable that on Thursday the S&P 500 moved into bull market territory, up over 20% from its October lows. For the week the index rose 0.4%, in its fourth week of gains, while the Nasdaq Composite was up 0.1%, marking its seventh consecutive winning week, its longest streak since 2019. The indices were buoyed by a surge in Tesla which has risen for eleven consecutive days, although on the whole value stocks outperformed growth for the week. The 10-year Treasury note also saw muted trading, with the yield ending higher at 3.75%.
The mood was cautious in Europe, with investors also eyeing the European Central Bank (ECB) meeting. The ECB is expected to hike interest rates again in June, although the picture is less certain for subsequent meetings. For the week, the pan-European STOXX 600 fell 0.5% with a worsening economic picture emerging. It had been initially thought that the eurozone economy had managed to evade a technical recession however first quarter GDP was downwardly revised to -0.1%, pushing it into a mild recession. Retails sales data also pointed to weak consumption in April.
In contrast, Japan saw an upward revision to its first quarter GDP to 2.7% from 1.6%, driven by stronger corporate investment. This helped buoy sentiment with the Nikkei 225 back up at another 33-year high and rising 2.4%. The economic rebound in China remained shaky, with exports contracting more than expected while factory gates prices saw their weakest reading since May 2020. The weak data raised expectations for Beijing to step in with further stimulus. Despite the underwhelming data, the Hang Seng rose 2.3% while the Shanghai Composite was flat.
Oil prices advanced at the start of the week after Saudi Arabia had announced over the weekend that it would cut one million barrels per day of oil from July. This came after OPEC+ agreed to stick with their current production targets until the end of the year. The uptick didn’t last long, with investors shrugging off the news and sentiment turning bearish on news that the US and Iran had resumed nuclear talks, which could see Iranian barrels become unsanctioned. Rising US fuel stocks and weak Chinese economic data also weighed. For the week Brent crude ended 1.7% lower at $74.80 a barrel.
The value of your investment can fall as well as rise in value, and the income derived from it may fluctuate. You might get back less than you invest. Currency exchange rate fluctuations can also have a positive and negative affect on your investments. Please note that EFG Harris Allday does not provide tax advice. Past performance is not a reliable indicator of future performance.
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