The world’s equity markets’ seemingly unstoppable advance was slowed down as the gains by the technology sector pulled back and strong economic data weighed on predictions about inflation and rate cuts. The S&P 500 dropped quite a bit, with the biggest single day drop since February 13. Climbing oil prices and chatter about the possibility of less than three rate cuts in 2024 also had a strong influence on investor behavior during the week. The yields on U.S. fixed-income securities rose during the week. China continued its efforts to attract investment in its economy, while announcing that it will adjust its monetary policy according to the prevailing economic conditions in the near future. In Gaza, the U.S. has called for an immediate ceasefire by Israel and made it clear to Prime Minister Netanyahu that any future aid will depend on the country’s compliance with the ceasefire terms. The relations between the two countries are quite strained after the most recent exchange.

Global Equity
  • The MSCI All Country World Index declined during the week, after the increasing likelihood that rate cuts may not be as forthcoming as it had been previously thought. U.S. equities also had a rough week for primarily the same reason. 
  • Federal Reserve of Minneapolis President Neel Kashkari indicated that interest rate cuts may not be necessary this year if inflation doesn’t move closer to the 2% target. 
  • European stocks declined due to worries about postponed central bank rate cuts, while UK house prices retreated in March and high street sales fell by 2.2%. The Inflation rate in Germany dipped to 2.2% which was the lowest since May 2021. France’s inflation rate also declined, reaching its lowest level since September 2021, as it slowed to 2.3%. 
  • China registered its fastest growth in three months, driven by new businesses and expansion in the manufacturing industry. U.S. Treasury Secretary Janet Yellin has started off her official tour of China, with a discussion about overcapacity concerns and encouragement to pursue market-oriented reforms.
  • Fitch official James McCormack suggested that the Japanese economy has reached a positive cycle of wage increases and steady inflation, where wage growth will have a positive impact on economic growth. In addition, Japanese non-manufacturers’ output improved to a more than three-decade high in the first quarter.
U.S. Equity
  • The S&P 500 ended the week 200 points lower. The index recorded 49 new 52-week highs and 3 new lows, while the Nasdaq recorded 83 new highs and 46 new lows.
  • Economists predict that March non-farm payrolls will decrease to 200,000 from February’s 275,000, with an unchanged unemployment rate of 3.9%.
  • The Labor Department reported that filings for unemployment claims for the week ending March 30 climbed by 9,000 to 221,000 from the previous week’s 212,000.
  • Atlanta Fed President Raphael Bostic, a voting member of the Fed’s rate-setting committee, revised his forecast. He now expects only one interest-rate cut this year, likely occurring later than initially anticipated.
  • Walt Disney’s existing board has secured enough shareholder votes to defeat a challenge against them mounted by Nelson Peltz’s hedge fund Trian Fund Management.
  • Alphabet slipped 0.8% after a report that the Google parent has been talking to its advisers about the possibility of making an offer for HubSpot. 
  • The powerful 7.2-magnitude earthquake struck Taiwan’s eastern coast near Hualien County on April 3rd. It is likely to tighten the supply of tech components such as display panels and semiconductors.
  • Samsung Electronics is raising its investment in Texas to about $44 billion for chip development.
U.S. Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index was relatively stable over the week. U.S. bond yields are rising due to robust economic data, which suggests the Fed may delay rate cuts to avoid inflation risks.
  • The U.S. 10-year Treasury yield hit 4.43% during the week, the highest level in over 4 months. The yield on the 2-year was at 4.67%. 
  • The U.S. Dollar Index strengthened over the week as the doubts about the timing of potential interest rate cuts by the Fed weighed on the currency.
Sources

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