US equities rose for a second consecutive week as strong first quarter earnings helped to recover much of the lost ground seen during a difficult April. The S&P 500 and NASDAQ rose by +0.6% and +1.4% (dollar terms) respectively with growth stocks outperforming their value counterparts. Results from the likes of Apple were well received despite a notable slump in one of its key markets, China[1] whilst fellow key constituent Tesla also rallied after CEO Elon Musk’s positive meeting with Chinese authorities. Analysts are now expecting overall S&P 500 earnings to have grown by +5.0% when compared to the same quarter in 2023, a meaningful acceleration on previous estimates (+3.5%)[2]. Friday’s US jobs report also added to the positive market momentum with weaker wage growth and jobs creation signaling lower inflationary pressures.

Elsewhere, Chinese and Japanese equities also advanced with the Shanghai Composite and Nikkei 225 rising by +0.5% and +0.8% respectively (local currency). It was a holiday shortened week in China which closed on Wednesday for the Labor Day Holiday with its gains delivered over the first two days of the week. Meanwhile in Japan, markets reached their highest since early April due in part to a growing perception that the Bank of Japan had intervened in currency markets to prop up the ailing yen. In Continental Europe, equities lost ground on growing uncertainty around the direction of travel for local interest rates (MSCI Europe ex UK index: -0.9%) whilst in the UK, the FTSE 100 rose by +0.9% on the back of strong gains amongst its energy and mining companies[3].

Oil prices continued to retreat, Brent Crude slumping by -7.3% to $82.96 a barrel. Concerns relating to US demand continue to weigh on sentiment whilst supply disruption in the Middle East has failed to materialise despite the ongoing conflict between Israel and Hamas. Gold also declined with the precious metal falling by -1.7% to $2,293 an ounce. It was a second straight weekly loss for the commodity as it continued to pull back from the record levels set in early April.

Week Ahead

Source: Refinitiv Workspace, 07/05/24

[1] Apple Inc – Second Quarter Results, 02/05/2024

[2] John Hancock Investment Management – Weekly Market Recap 03/05/2024

[3] T. Rowe Price – Global Markets Weekly Update 03/05/2024

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