Most major equity indices posted gains during a relatively quiet week for economic data releases. The S&P 500 finished +3.5% higher over the course of the week whilst the UK’s FTSE 100 gained +3.1%, during a week in which banking stocks found firmer footing after a testing month.
On Thursday, the Biden administration released a set of proposed new regulations for mid-sized banks that would more closely align them with larger US banks. More stringent capital and liquidity requirements as well as more frequent stress tests are among the potential new requirements.
On the back of a busy period on the central bank calendar, last week saw a lull in activity with a modest downward revision to economic growth in the US arguably the primary focus. Fourth quarter Gross Domestic Product was lowered to an annualised rate of 2.6%, down ten basis points on the previous estimate. This was mainly due to downward revisions to exports and consumer spending.
Inflation in Europe dropped notably in March to a headline rate of 6.9%, down a little more than forecasts indicated, but core inflation which strips out volatile elements like energy actually accelerated. This keeps the pressure on the European Central Bank for more rate rises. European stocks also enjoyed a better week, despite Russian President Vladimir Putin again threatening to move tactical nuclear weapons to Belarus, closer to the frontline in Ukraine. Germany’s DAX 30 still closed the week +3.3% higher and the French CAC 40 climbed +4.4%.
Asian markets enjoyed a more modest recovery with the MSCI Asia ex Japan index ending the week +1.5% higher, whilst Japan’s Nikkei 225 was up +2.4%. Japanese data during the week pointed to improved industrial production and retail sales figures which rebounded strongly from recent low, however labour market data softened somewhat in February and remains a point of concern. All eyes are on the new Bank of Japan governor and any initial steps he could take towards policy normalisation in the coming months.
Elsewhere, the MSCI Emerging Markets index closed +1.6% higher over the course of the week.[1]
Week Ahead
The Easter holidays mean a four-day week for the UK and Europe ahead, however the first Friday of a new month also brings the latest US Labour Report which remains scheduled for release on good Friday. This will include the latest Non-farm Payrolls data, wage growth figures and a revised unemployment rate which is currently forecast to remain unchanged at 3.6%.
Purchasing Managers Index (PMI) surveys will provide a gauge of business activity levels on both sides of the Atlantic this week, with European and UK Manufacturing PMI figures due on Monday and Services sector readings on Wednesday. The Institute for Supply Management are set to release equivalent data in the States.
Central bank policy meetings are scheduled in Australia and New Zealand this week with further rate rises anticipated at both.[2]
Past performance is not indicative of future performance.
The value of an investment may fall as well as rise. You may get back less than the amount invested.
The value of investments may fall as well as rise purely on account of exchange rate fluctuations.
© S&P Dow Jones LLC 2023. All rights reserved
Source: London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2023. FTSE Russell is a trading name of certain of the LSE Group companies. “FTSE Russell®” is a trade mark of the relevant LSE Group companies and is used by any other LSE Group company under license. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.
Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, endorsed, reviewed or produced by MSCI. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.
The information contained does not constitute investment advice. It is not intended to state, indicate or imply that current or past results are indicative of future results or expectations.
Full advice should be taken to evaluate the risks, consequences and suitability of any prospective investment. Opinions provided are subject to change in the future as they may be influenced by changes in regulation or market conditions. Where the opinions of third parties are offered, these may not necessarily reflect those of Rowan Dartington.
Rowan Dartington is part of the St. James’s Place Wealth Management Group. Rowan Dartington & Co. Limited is a member firm of the London Stock Exchange and is authorised and regulated by the Financial Conduct Authority. Registered in England & Wales No. 02752304 at St. James’s Place House, 1 Tetbury Road, Cirencester, England, GL7 1FP, United Kingdom.
[1] Refinitiv, 03/04/23
[2] Forex Factory, 03/04/23
SJP Approved 03/04/23