Global equity markets posted positive returns last week with support coming from a pullback in US treasury yields. The 10-year security concluded the week 6 basis points (bps) lower at 4.43% with longer dated yields also falling throughout the week; they did pick up again on Friday although it was too late in the week to stem the upwards momentum in equity markets. Growth stocks performed well, the technology heavy NASDAQ index added +3.3% to build on the prior week’s gains with the broader S&P 500 rising by a solid +2.5%.
Elsewhere, the MSCI Europe ex UK index rose by +1.3% thanks in part to core inflation data which continued to fall during August, the index declining by 20bps to 5.3%. That lifted hopes that the European Central Bank (ECB) may be close to reaching the conclusion of its rate hiking cycle. Across the Channel, the FTSE 100 and FTSE 250 rose by +1.7% and +2.2% respectively with the former recording a second straight weekly gain. Strong market returns were also seen in Asia, notably the Nikkei 225 in Japan which jumped by +3.4%. Yen weakness and an uptick in optimism relating to China following the introduction of further measures to boost the economy were both supportive. Unsurprisingly, the latter point also provided a nice boost to local equities in China with the Shanghai Composite rising by +2.3%.
Moving to commodities, Brent Crude spiked by +4.8% to $88.63 a barrel. The bounce back came after two straight weeks of decline and whilst global demand concerns remained in play, inventory levels declined sharply in the US. Production cut extensions by OPEC and Russia are also expected which added to the upwards pressure on prices. Decreasing rate hike expectations underpinned an uptick in gold with the precious metal rising by +1.8% to $1,939 an ounce.
Week Ahead
| Day | Country | Measure | Period | Forecast | Previous |
| Monday | N/A | - | - | - | - |
| Tuesday | China | Caixin Services PMI | August | - | 54.10 |
| Eurozone | PPI Inflation YoY | August | -7.60% | -3.40% | |
| Eurozone | Composite PMI | August | 47.00 | 47.00 | |
| UK | Final Composite PMI | August | 47.90 | 47.90 | |
| Wednesday | Eurozone | Retail Sales YoY | July | -1.20% | -1.40% |
| US | ISM Non-Manufacturing PMI | August | 52.50 | 52.70 | |
| Thursday | China | Exports YoY | August | -9.80% | -14.50% |
| Eurozone | Revised GDP QoQ | Q2'23 | 0.30% | 0.30% | |
| Friday | Japan | Revised GDP QoQ | Q2'23 | 1.30% | 1.50% |
Source: Refinitiv Workspace, 04/09/23
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