Last week was delightfully quiet and this was exactly what stock markets wanted! Concerns around bank failures subsided and stock markets bounced hard, with the global index of stocks enjoying its best week in 2 months! This week is very light in terms of scheduled data front as markets ease their way into the new month and new quarter, with US jobs data this Friday likely the biggest focal point.
Last week
- Equity markets had a very strong week to round off the quarter!
- Global stock markets had their best week in 2 months
- Inflation in the US and the Eurozone came in lower than expected
- The bond market took a breather: Government bonds gave up some ground as markets became more positive about the outlook (and less worried about a recession!)
This week
- It is scheduled to be an extremely quiet week!
- Today and Wednesday sees the release of global business survey data (PMIs) for the UK, US, China and the Eurozone
- Friday sees the release of the monthly US jobs data (Nonfarm Payrolls). Survey data from Bloomberg is expecting 240,000 new jobs to have been created in March and for the unemployment rate in the US to hold steady at 3.6%
Equity returns are in GBP, Oil is in USD. Gold is shown in GBP. Bond returns are all shown in GBP. Source Bloomberg.
Last week in more detail
- Last week was a very quiet one for global stock markets and that was just what was needed! Fears around the banking sector died down (helped by some new proposed regulation in the US) and this helped restore confidence and propel gains. Global stocks rose by about 2.6% on the week, with UK and European stock markets performing best; up 3% and 4.3% respectively. This helped round off some pretty strong numbers for the first quarter as a whole, which saw global stocks rise by about 5.5%, UK stocks rise by about 3.1% and European stocks rise by about 9% (FTSE World, FTSE All Share, and FTSE Europe ex UK, respectively. All total return in GBP).
- The first quarter of the year proved to be a very choppy one which saw equity markets climb a wall of worry. At a sector level, it was the larger, more expensive companies (that tend to reside in sectors such as technology and consumer discretionary) that did best, with the more cyclical sectors such as banks (for obvious reasons!) and energy which fared worst. Although we expect markets to remain choppy, it does speak to the cheaper starting point (following the re-set in valuations last year) that strong gains can be made against a challenging economic back-drop.
- Bank stocks advanced pretty strongly last week (after having a very tough first 3 weeks of March). This came on the back of quieter markets (notably a lack of negative news flow) and also a proposed new set of regulations from the Biden administration in the US. These proposed rules impose more stringent capital and liquidity requirements for those banks with assets between $100 billion and $250 billion. This helped the global banking sector of stocks rise by 3.5% on the week. Notable amongst the banking gains of last week would be UBS (who recently acquired failed bank Credit Suisse) which rose by 11.3% and First Citizens Bank (who recently bought Silicon Valley Bank), which rose by 65% on the week.
- Economic data last week showed that the UK narrowly avoided a recession last year, by virtue of growing by 0.1% in the fourth quarter (vs estimates of zero growth). There was also further evidence of downward pressures in the housing market, with the Nationwide house price index showing the fastest annual decline (-3.1%) since the Great Financial Crisis (“GFC”) in 2008.
- Inflation data came out for the US and the Eurozone last week and it was what the market wanted to see; the numbers came in less than expected and showed further evidence of the trend downwards. US core PCE (the Fed’s preferred measure) came in at 4.6% (vs expectations of 4.7%) and Eurozone inflation slowed to 6.9% (vs expectations of 7.1%).
- The bond market took a breather last week after a strong recent run. UK government bonds (10 year) fell by 1.45% on the week, with US treasuries down by 0.6%. This comes in the context of a strong year-to-date which has seen UK government bonds rise by 2%; due to bond yields falling as less aggressive than previously forecast interest rate rises have been reflected by the market.
Global Equities posted strong gains in the first quarter despite the choppiness in markets.
Source: Bloomberg
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