A cut in March now looks to be firmly off the table. Wall Street managed to pick up later in the week, mainly fuelled by earnings amid a lack of notable economic data. There was also relief following the US Treasury Department’s record $42bn auction of 10-year notes.
On Friday, the S&P 500 managed to cross the 5,000-mark for the first time and added 1.4% for the week. The tech-heavy Nasdaq outperformed, up 2.3%, while the Dow Jones only ended modestly above the flatline. Once again, it was primarily tech mega-caps driving gains, whereas the wider market lagged. Microsoft saw its market capitalisation rise to $3.125 trillion, the highest ever company value. There still remains a degree of caution around regional banks, with New York Community Bancorp’s stock price continuing to suffer after posting a surprise quarterly loss. The yield on the 10-year Treasury ended higher at 4.18%.
Rate cuts were also weighing on sentiment in Europe, but indices mostly managed to eke out gains. A number of European Central Bank officials reiterated that they need more certainty of inflation returning to the 2% target before cutting rates. For the week, the pan-European STOXX 600 was up 0.2%, with Italy’s index amongst leaders while the UK FTSE lagged and saw a loss. Germany’s DAX ended the week little changed, but in a worrying sign for the economy, industrial production in the country declined by more than expected in December, notching its seventh consecutive monthly drop.
In Japan, the Nikkei 225 added 2% for the week and hit another fresh 34-year high, crossing the 37,000-mark. Gains were fuelled by a weaker yen, although there was a degree of profit taking. In addition, much of the advance was driven by a handful of stocks, such as Uniqlo parent Fast Retailing, which hit an all-time high on Thursday and SoftBank. The Japanese tech investment company not only got a boost after it posted its first profit in five quarters but also benefited after Arm, of which it owns around a 90% stake, saw its shares surge around 60% for the week.
Chinese stocks saw a holiday shortened week, but notched advances on stimulus announcements. The Shanghai Composite was up nearly 5% in its four days of trading, its best week since November 2022, with the market resuming on 19 February. Meanwhile, the Hang Seng was up 1.4%. Sentiment was propped up after the China Securities Regulatory Commission vowed to stabilise the market, while the removal of chair Yi Huiman was announced on Wednesday. Hopes of support offset concerns about ongoing deflation in the economy.
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