In the week that was, the world’s equity markets gained ground as the world’s developed economies continued to toy with the idea of rate cuts in the offing. Global equity fund and US bond funds attracted very strong inflows for the week and mixed economic data from the US gave signs that the lagged effects of rate hikes was finally coming in. The yields on fixed-income securities declined, Eurozone bonds lost a bit of ground after Fed Chair Powell’s testimony to Congress. The Bank of Japan hinted that it plans to exit negative rates territory in March. A maritime aid corridor could start operating between Cyprus and Gaza as early as this weekend to relieve the humanitarian crisis in the war-ravaged Palestinian enclave.

Global Equity
  • The MSCI All Country World Index went up during the week. Global equity funds attracted a net $6.5 billion during the week, driven by weak U.S. manufacturing data and the increased expectations of interest rate cuts later this year.
  • Fed Chair Jerome Powell’s dovish testimony to Congress about the current stance on the country’s monetary policy was the talk of the week as he reinforced his current stance and said that any chance of a rate cut would depend on the economic data in the upcoming months. 
  • US President Joe Biden and Donald Trump won their respective primaries on Super Tuesday and lead the race in securing tickets for the 2024 elections to be held in November. President Biden’s State of the Union address also added weight to his campaign to be re-elected, while Nikki Haley pulled out of the race but did not endorse Trump. 
  • The European Central bank kept rates the same but announced a rate cut might be in the offing, after a week that saw European shares rally owing to the performance in the Energy and Financials sectors. The ECB also cut its growth and inflation estimates for the year during the week. 
  • China’s export and import growth in the January-February period beat forecasts, suggesting global trade is turning a corner in an encouraging signal for policymakers as they try to shore up a stuttering economic recovery. The country also announced a $27 billion fund to shore up investments in the global race for manufacturing state-of-the-art microchips
U.S. Equity
  • The S&P 500 slightly rose during the week. Driven by the increasing likelihood of rate cuts in the near future and the performance of technology stocks, US equities continued its positive march as the Bank of America has upgraded its year-end target for the S&P 500 to 5,400.  
  • The U.S. Treasury Department has announced new steps to boost the supply of affordable housing by unlocking billions of dollars in unspent COVID-19 aid funding to state and local governments to support a wider array of housing projects.
  • U.S. homebuying sentiment rose for a third consecutive month in February largely because a growing view among current homeowners that now is a good time to sell their house could bode well for a much-needed uptick in home listings.
  • JetBlue Airways and Spirit Airlines have scrapped a $3.8 billion merger deal after a U.S. judge blocked the deal in January on anti-competition concerns.
  • Cadence Design Systems will buy BETA CAE Systems International AG, which makes software for analyzing car and jet engine designs, for $1.24 billion in cash and stock.
  • Short sellers targeting a key regional U.S. bank exchange-traded fund have made $977 million on paper so far in 2024.
  • The U.S. Food and Drug Administration (FDA) has cleared the use of Dexcom’s new tab device, making it the first continuous glucose monitor to be available over the counter
U.S. Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index rose over the past week. Bond yields decreased over the week, as expectations of rate cuts and an uptick in economic activity from January to February weighed on performance.
  • The U.S. 10-year Treasury yield declined from 4.22% to 4.09% over the last week, while the yield on the 2-year bond came down from 4.61% to 4.51%, causing spreads to widen.
  • Investors pumped in about $10.54 billion into U.S. bond funds during the week in their largest weekly net purchase since end-June 2021.
  • The U.S. Dollar Index declined over the week.
Sources

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