Financials was one of the best performing sectors as more banks posted generally favourable earnings updates. Goldman Sachs briefly plunged after a revenue miss however it managed to recover losses, while regional bank Western Alliance surged on news that its deposit outflows had stabilised. Amongst other earnings reporters, Netflix declined after its subscriber growth underwhelmed. Tesla was also a detractor as its margins took a hit from it lowering vehicle prices.
For the week Wall Street saw modest losses, with the S&P 500 down 0.1% and the Nasdaq dropping 0.4%. The Cboe Volatility Index dropped to its lowest level since late 2021, while trading volumes were light. Investors are waiting for more earnings reports to roll in as well as the upcoming preliminary first quarter GDP report for further indications on the health of the economy. Treasury yields were slightly higher for the week, jumping after Friday’s PMI data from S&P Global. The 10-year Treasury yield ended up at 3.570%.
Most European markets saw gains for the week, with the pan-European STOXX 600 up 0.5%. There was optimism about the economy with the eurozone Composite PMI ticking higher in April, driven by the service sector whilst manufacturing lagged. Government bond yields were higher as investors monitored prospects for the next European Central Bank rate hike. UK government bonds were also higher after UK annual inflation eased to 10.1% in March, defying market expectations to drop down to single-digits. This raised the prospect of another rate hike from the Bank of England at its May meeting.
Japan’s Nikkei 225 also saw a modest gain for the week. The core consumer price index remained unchanged at 3.1% in March, remaining above target and adding pressure to the Bank of Japan to normalise policy. The BoJ will meet this week in their first meeting with new governor Kazuo Ueda. Chinese stocks had started the week strongly, with prices for new homes rising by their fastest pace in 21 months. The following session GDP figures were released, with the economy growing more than expected in the first quarter of the year, at 4.5%. This however failed to lift the mood with both the Hang Seng and Shanghai Composite ending the week lower, with concerns that the US would tighten restrictions on Chinese tech.
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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