The world’s equity markets had a mixed week as early gains were wiped out after the AI and technology-related stocks pulled back due to Nvidia being sued for use of copyrighted works as well as the announcement of the latest inflation numbers in the U.S. U.S. money market funds continued to reach new record highs as investors continue to be tepid about the possibility of rate cuts. The yields on U.S. fixed-income securities rose during the week as the major indices declined during the week. The Bank of Japan continued to plan to shift away from its ultra-accommodative monetary policy after a historic wage hike was agreed to by some of Japan’s biggest companies.

Global Equity
  • The MSCI All Country World Index went slightly up during the week. Global equity funds saw a net $22.63 billion worth of inflows during the week, the largest amount in a week since the first week of February 2022.
  • The US consumer price index increased 3.2 percent in February from a year ago. The consumer price index was slightly higher than the expectations of 3.1 percent. According to the Labor Department, the consumer price index increased 0.4 percent from the previous month.
  • Donald Trump and Joe Biden have secured their position as the candidates for their respective parties for the election in late 2024. In Russia, the election for a new president gets underway on Friday but the results are somewhat a foregone conclusion with Vladimir Putin touted to retain his position. 
  • In a week of announcements, two forecasting institutes cut their 2024 growth forecast for the German economy, citing weak consumption and high interest rates. On the other hand, France’s economy is expected to eke out growth in the second quarter after stalling in the first, as higher consumer spending helps offset the drag from interest rates 
  • The People’s Bank of China has kept its lending rate steady at 2.5%, extending its cautious approach and draining cash from the banking system, using this medium-term liquidity tool for the first time since November 2022. 
  • Japan’s biggest companies agreed to raise wages by 5.28% for 2024, the heftiest pay hikes in 33 years. This move will likely ensure the Bank of Japan will shift away from a decade-long monetary stimulus program.
U.S. Equity
  • The S&P 500 ended the week somewhat flat. Tech and AI-related stocks pulled back after making over extended gains in the past weeks. The CPI print for February and a jump in producer prices left investors wondering if the Federal Reserve might wait longer than expected to cut interest rates.  
  • A Federal Reserve facility, called the Bank Term Funding Program, launched in haste a year ago amid the heavy stress triggered by Silicon Valley Bank’s collapse closed for new business, amid evidence it helped turn the tide of trouble that risked derailing the economy and upending the central bank’s efforts to lower inflation. 
  • U.S. retail sales rebounded less than expected in February, suggesting a slowdown in consumer spending in the first quarter amid rising inflation and high borrowing costs. The labor market also remains fairly tight. Fewer Americans applied for unemployment benefits last week and annual revisions to the weekly claims data showed laid-off workers were quickly finding new work
  • The United States House of Representatives has overwhelmingly passed a bill that could eventually ban the social media platform TikTok in the country, in its latest salvo against both China and big tech. The bill received resoundingly bipartisan support, with vote of 352 to 65 in favour.
  • Private equity firm Vista Equity Partners is seeking to hire investment banks for a U.S. initial public offering of Solera, a provider of software to the automotive and insurance industries. Vista, which acquired Solera for $6.5 billion in 2016, is interviewing banks as it seeks to hire IPO underwriters.
  • Electric vehicle startup Fisker has hired restructuring advisers to assist with a possible bankruptcy filing. Earlier this month, Fisker flagged going-concern risks, job cuts and a pause in investments into future projects until it secures a partnership with a manufacturer.
  • U.S. money market assets rose to a fresh record for the third straight week as total assets climbed to $6.1 trillion.
U.S. Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index experienced a decline over the week due to an increase in bond yields. This rise in yields was a result of investors reassessing the possibility of interest rate cuts by the Federal Reserve, which was prompted by an unexpected rise in U.S. inflation numbers.
  • The U.S. 10-year Treasury yield increased from 4.07% to 4.31% over the week, while the yield on the 2-year bond moved up from 4.47% to 4.72%.
  • The U.S. Dollar Index strengthened over the week.
Sources

HCM-030624-063.GWS