Global Stock Markets rose over the week. The S&P 500 index rallied as the Magnificent Seven led the way for the second week running, with good corporate earnings numbers and stellar plans for AI-related investments in the near future. Soft jobs data released this week indicated that the U.S. economy could finally be slowing down, paving the way for a change of stance on monetary policy. The energy sector continued to lead the market with 1.1% growth in value due to rising international demand. In technology, Intel and Qualcomm stocks dropped as U.S. government revoked their export licenses to Huawei. Uber Technologies and Disney stocks also slipped as they reported losses, despite increasing revenues. The U.S. government halted arms exports to Israel for the conflict in Gaza, but Israeli troops proceeded with their plans to lay siege to the city of Rafah.

Global Updates
  • The MSCI All Country World Index rose during the week as investors were encouraged by European policymakers signaling rate cuts could be implemented soon.
  • The United States has restricted Chinese access to American tech by revoking export licenses of processors by Intel and Qualcomm to Huawei and high-tech imports from China. Despite this, the United States has overtaken Germany as China’s largest trading partner.
  • Riksbank, Sweden’s central bank, became the second advanced economy to lower key interest rates by 25 basis points to 3.75%. 
  • The Bank of Japan’s policy board expressed concern over the rising inflation as a weak yen drives up import prices. Governor Kazuo Ueda expressed the possibility of an early rate cut if inflation exceeded forecasts. 
  • U.K.’s National Institute of Economic and Social Research speculated that the Bank of England will implement rate cuts twice this year, starting in August, to spur economic growth beyond the forecasted 0.9% GDP growth for 2024. 
  • Chinese president Xi Jinping visited Europe to negotiate trade and cement the shaky economic recovery in April.
  • The United Nations warned that aid for the Gaza Strip could grind to a halt in days, as Israeli troops took their ground war with Palestinian fighters into the crowded city of Rafah, a key aid corridor for the famine-threatened strip.
U.S. Equity
  • The S&P 500 Index rose over the week, supported by better-than-expected corporate earnings announcements and the exciting growth prospects of AI related technologies.
  • Stocks of the ‘Magnificent Seven’ companies signaled a mixed trend in the markets. While Microsoft, Meta and AMD stocks rose, Apple’s stock fell following Berkshire Hathway’s decision to trim 13% of its stake in Apple to shore up their cash position. 
  • Tesla shares declined following the announcement of sales falling by 18% year-on-year in Q1 2024, even though global EV sales continued rising. During the week, Tesla also announced its plan to introduce Robo-taxis in August and gain the first-mover advantage.
  • Intel shares declined as the company lowered its sales outlook following U.S. government restrictions on sales to Huawei Technologies. Qualcomm stocks remained unaffected as the revenue impact was already priced in. 
  • The U.S. Labor Department reported 175,000 new jobs added in April, 50% less than March. Unemployment rose by 3.9% in the same period.
  • TikTok sued the U.S. government citing the violation of the First Amendment rights of millions of Americans through the imposition of a ban on the app.
U.S. Fixed Income
  • The Bloomberg U.S. Aggregate Bond Index remained stable this week with minor fluctuations as the Fed kept interest rates unchanged owing to sticky inflation. 
  • The U.S. 10-year Treasury yield marginally fell to 4.45 over the week, while the yield on the 2-year note rose slightly to 4.82.
  • The U.S. Dollar Index marginally rose to 105.26 during the week driven by strong corporate earnings in Q1 2024, and the depreciation of Yen, Yuan, and other currencies.
  • The U.S. Treasury auctioned 30-year bonds for $25 billion at a yield of 4.63%.
Sources

HCM-030624-063.GWS