However policymakers paused debt ceiling talks on Friday, dampening the mood and pushing stocks lower. Despite this, for the week overall US equities posted gains. The S&P 500 was up 1.7% in its first weekly advance this month, while the Nasdaq climbed 3% in its fourth consecutive weekly gain.
Tech stocks were some of the strongest performers of the week, and financials also rallied. Regional banking names bounced back from losses seen the previous week as well as being boosted by Western Alliance reporting first quarter deposit growth. It was the turn of big retailers to report, providing a mixed picture. Home Depot and Target delivered a cautious tone for the sector whereas Walmart raised full-year sales forecasts. US retails sales data for April was also weaker than expected, however the jobless claims came in below expectations while industrial production exceeded expectations. Signs of resilience in jobs and manufacturing helped lift the yield on the 10-year Treasury note, ending the week at 3.65%.
European markets also tracked the debt ceiling news, with the STOXX 600 up 0.7%. The German DAX hit an all-time high on Friday, topping levels last reached in November 2021. This came despite signs that the eurozone economy was cooling. Industrial production fell in March, while Germany’s ZEW economic sentiment index saw its third consecutive drop. In contrast the European Commission raised its eurozone growth forecasts, expecting GDP of 1.1% this year.
Japanese equities continued their ascent, with the Nikkei reaching its highest level since August 1990. For the week it was up 4.8% in its seventh consecutive winning week. Equities in the region have been supported by strong corporate results, a weaker yen helping exporters and signs that the economy was picking up, prompting foreign investors to jump in. In China, the Shanghai Composite saw a more modest 0.3% rise while the Hang Seng bucked the trend and dropped 0.9%. The mood was dampened after weak consumer spending and industrial production data, raising concerns about the robustness of its economic recovery. Also some large tech names dropped on their underwhelming earnings reports.
Earlier in the week, the Mexican peso touched seven-year highs however it later retreated against the dollar. It dropped after the Mexican central bank halted its tightening cycle, leaving its policy rate at 11.25%. MSCI’s index of Latam stocks had started the week strong but ultimately ended lower. In other emerging market news, the Turkish lira sank to a fresh record low following Sunday’s election where incumbent President Erdogan performed better than expected.
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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