The world’s equity markets had a stellar week as tech stocks delivered another solid string of results. The U.S. Federal Reserve kept rates unchanged in its latest meeting and the expectation now is that a 75 basis points cut will be planned over 3 meetings in the latter half of 2024. The European Central Bank, however, did not provide any such roadmap for its plans, saying it will act as per the situation in the economy. Coming back to technology, Apple started the week with discussions with Google to use their Gemini AI in its iPhone, but ended the week with one of the biggest lawsuits filed by the U.S. government for illegal monopolistic practices. The Bank of Japan changed its stance on monetary policy after almost 2 decades, paving the way for a change in regime. The UN security council will take a decision on a proposal for a ceasefire in Gaza. U.S. officials have been negotiating an alternative to support diplomatic efforts on the ground for a six-week truce in exchange for release of hostages.

Global Equity
  • The MSCI All Country World Index went up during the week, mainly due to the positivity in the global economy owing to the continued stellar performance by major chip manufacturing firms. A decline in corporate earnings in China offset some gains. The Federal Reserve kept rates unchanged in its latest announcement, setting the stage for rate cuts later in the year. 
  • U.S. equities rallied during the week, with chipmakers leading the way. The stock of Micron Technology rose significantly after it announced a surprise profit, while Intel received $20 billion in grants and loans from the US government to promote domestic chip production. NVIDIA unveiled its latest AI chip built on the new Blackwell architecture.
  • European equities also rose during the week owing to expected interest rate cuts by the Bank of England and due to a drop in inflation numbers which was caused by lower food and restaurant prices. While Vladimir Putin won his country’s presidential election by a landslide, Germany has slipped into recession.  
  • Chinese equities declined during the week, mainly due to an announcement by The National Financial Regulatory Administration about stricter rules for consumer finance companies aimed at containing financial risks. A decline in corporate earnings and the Chinese Yuan also contributed to the sub-standard market performance. 
  • The tech rally in the U.S. also boosted the performance of the Japanese equity market. A strong performance by Tokyo Electron and a weaker Yen that promoted the exports also aided the market. The Bank of Japan announced that they were ending their ultra-accommodative monetary policy stance and made its first rate hike in 17 years.
U.S. Equity
  • The S&P 500 rallied strongly during the week as AI-related chipmakers like Intel and Micron led the way.   
  • The Federal Reserve held steady on interest rates at the conclusion of its March meeting, and it’s sticking with its forecast for three interest rate cuts. Fed Chair Jerome Powell also noted that a strong jobs market wouldn’t deter the central bank from cutting rates. 
  • Borse Dubai, which was the top shareholder in the Nasdaq exchange, decided to sell shares worth $1.6 billion dollars and cede its position as the top shareholder to private equity firm Thoma Bravo.   
  • Lawmakers introduced a $1.2 trillion spending package to avoid a partial government shutdown for several key federal agencies and allows Congress, nearly six months into the budget year, to complete its work funding the government through September.
  • The U.S. Justice Department and more than a dozen states filed a blockbuster antitrust lawsuit against Apple accusing the giant company of illegally monopolizing the smartphone market. It is the largest in a recent string of Big Tech companies to face antitrust complaints from the U.S. government. Earlier in the week, Apple announced a possible collaboration with Google to use its Gemini AI to power AI offerings in its iPhone.
  • Reddit became the latest social media platform to successfully complete an IPO and ended their first day of trading in New York up 48%.
U.S. Fixed Income
  • The week saw positive returns for the Bloomberg U.S. Aggregate Bond Index as bond yields decreased following the Federal Reserve’s decision to uphold its guidance during the March meeting. This decision indicates that the central bank is still committed to reducing interest rates three times this year. 
  • The economic data that was published this week once again indicated a robust economy, along with a stable labor market. Officials from the Federal Reserve emphasized the importance of gaining further assurance that inflation is steadily declining towards the 2% target before considering any rate cuts. 
  • The U.S. 10-year Treasury yield declined from 4.30% to 4.24% over the week, while the yield on the 2-year bond dropped from 4.73% to 4.62%.   
  • The U.S. dollar rose over the week on expectations that other major central banks might initiate interest rate cuts before the Federal Reserve.
Sources

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