Global stock markets witnessed a significant decline over the week as investors turned to safe-haven assets amid mounting concerns regarding the escalating tensions between Iran and Israel, sparking fears of a wider regional conflict. Both the United States and the United Kingdom implemented restrictions on Russian aluminum, nickel, and copper trading on the London Metal Exchange and the Chicago Mercantile Exchange, dealing a blow to Moscow’s main sources of revenue. Federal Reserve (Fed) Chair Jerome Powell emphasized the need for patience with regards to the current tight monetary policy. European Central Bank President Christine Lagarde suggested that the German economy might be showing signs of recovery. President Joe Biden has urged the U.S. Trade Representative to triple the tariff rate on steel and aluminum imports from China. The People’s Bank of China maintained the interest rate on its one-year medium-term lending facility at 2.5% while injecting $13.82 billion into the financial system through this mechanism. Gold prices have risen for the fifth consecutive week.

Global Equity
  • The MSCI All Country World Index experienced a decline over the week following reports of Israel targeting sites in Iran, Iraq, and Syria in retaliation to Tehran’s attack against Israel.
  • Federal Reserve Chair Jerome Powell has emphasized that the restrictive rates policy requires more time to effectively yield results.
  • Samsung secured its position as the leading smartphone brand globally, while Apple faced a 10% decline in iPhone sales during the first quarter of 2024.
  • Taiwan Semiconductor Manufacturing Company (TSMC) reported higher first-quarter profit, breaking a streak of three consecutive quarters of declines. This growth was driven by a surge in demand for advanced chips amidst the global artificial intelligence boom.
  • China’s GDP grew by 5.3% in the first quarter of 2024 despite the ongoing crisis in the property sector. The government aims for an economic growth target of approximately 5% for the year, a goal that many analysts consider ambitious and potentially requiring additional stimulus measures.
  • Canada has hiked capital gains tax to raise billions for housing.
U.S. Equity
  • The S&P 500 Index had a notable slide during the week after news emerged of Israel striking locations in Iran, Iraq, and Syria in response to Tehran’s assault on Israel. 
  • Investors reduced their expectations for rate cuts by the Fed and began considering the scenario of no reductions taking place this year.
  • President Joe Biden urged the U.S. Trade Representative to triple the tariff rate on steel and aluminum imports from China.
  • House Speaker Mike Johnson faced opposition from fellow Republicans regarding his proposed aid package for Ukraine, Israel, and other allies.
  • Goldman Sachs revised its U.S. equity market forecast for the second time, raising the target to 5,200 as the S&P 500 surpassed 5,000 this month.
  • Strong performance in investment banking and the management of money and investments for wealthy clients contributed to a 28% increase in Goldman Sachs’ first-quarter profit.
  • Franklin Templeton has emerged as a significant player in private asset management, overseeing over $260 billion in alternative assets, including private credit.
  • In response to a weaker market for electric vehicles, Tesla plans to lay off more than 10% of its workforce, while two of Elon Musk’s top deputies have announced their departure from the company. In addition, Tesla has sought approval from its shareholders to relocate its state of incorporation from Delaware to Texas.
U.S. Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index experienced a slight increase during the week due to Israel’s strike on Iran, which led to a surge in demand for safe-haven assets.
  • Borrowing costs are still high as there are expectations that the Fed will maintain higher interest rates for a longer period. Recent data indicates a strong U.S. economy, with initial unemployment claims below projections in mid-April and the Philadelphia Fed manufacturing index reaching a two-year peak.
  • The U.S. 10-year Treasury yield slipped from 4.63% to 4.59% over the week, while the yield on the 2-year note remained steady at 4.93%.
  • The U.S. Dollar Index ended the week nearly unchanged as investors evaluate the situation in the Middle East.
Sources

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