Global stock markets had a challenging week due to continued uncertainty around the timing of interest rate cuts in the United States, as well as mixed corporate earnings figures.
While it came as no surprise that the Federal Reserve chose to leave rates unchanged at its Wednesday meeting, Fed chair Jerome Powell gave little indication as to when the central bank might start to relax monetary policy. With inflation in the US remaining stubbornly above its 2% target, investors have started to worry that the Fed could in fact be forced to raise rates – although Powell’s comments suggested this is not currently a route that he and his colleagues expect to take.
Meanwhile, hopes of a ceasefire between Israel and Hamas helped ease geopolitical tensions and saw the price of oil fall back from its recent high, and the latest set of improved business data from the Chinese economy helped boost share prices in Asia.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday flat for the week so far, with the S&P 500 falling 0.7%. The week began positively with shares in one of America’s biggest technology firms rising after it announced a distribution deal in China. However, corporate results on Tuesday and Wednesday were more uneven, with a few earnings statements suggesting that trading conditions in the US are becoming more challenging. Recent data indicated a slowdown in the manufacturing sector, although the American employment market remains resilient.
UK
In the UK, the FTSE 100 closed on Thursday 0.4% up for the week so far after extending its recent strong run to reach another record high. Corporate results from the energy and banking sectors helped support the week’s advance, although weak economic data weighed on the market to some extent. Retailers warned of fresh produce price rises over the summer due to difficult growing conditions in recent months, while manufacturers are also expected to raise their prices in response to ongoing supply-chain challenges. Meanwhile, the OECD has predicted that growth in the UK will be the lowest of all the G7 countries in 2025.
Europe
In Frankfurt, the DAX index ended Thursday’s session down 1.5% for the week, while France’s CAC 40 fell 2.1%. Comments from a senior policymaker at the European Central Bank dampened hopes of multiple interest rate cuts this summer. Investors had hoped the ECB would reduce borrowing costs in both June and July, but this now appears increasingly unlikely given the recent recovery in the eurozone economy. Figures published this week showed a larger-than-expected rise in first-quarter GDP in the bloc, although there are signs that factory output has started to slow in recent weeks.
Asia
In Asia, the Hang Seng index in Hong Kong gained 3.1% to extend its recent strong run. Latest figures showed the recovery in China’s manufacturing sector had continued in April, while news that politicians in Chengdu had lifted restrictions on property purchases raised hopes other cities would follow suit, providing a boost for the country’s struggling real estate sector. Japan’s Nikkei 225 index of leading shares, meanwhile, advanced 0.8% as policymakers took action to shore up the yen in the face or recent dollar strength. However, there were fresh signs of weakness in the Japanese economy, with consumer confidence reported to have fallen last month.
April 26 | May 2 | Change (%) | |
|---|---|---|---|
FTSE 100 | 8139.8 | 8172.2 | 0.4 |
FTSE 250 | 19824.2 | 20052.3 | 1.2 |
S&P 500 | 5100.0 | 5064.2 | -0.7 |
Dow Jones | 38239.7 | 38225.7 | 0.0 |
DAX | 18161.0 | 17896.5 | -1.5 |
CAC 40 | 8088.2 | 7914.7 | -2.1 |
ACWI | 762.4 | 760.5 | -0.2 |
Hong Kong Hang Seng | 17651.2 | 18207.1 | 3.1 |
Nikkei 225 | 37934.8 | 38236.1 | 0.8 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 2 May 2024.
