Weekly recap of world’s major stock markets; China, USA, Japan and Europe.
U.S.
S&P 500 at record highs
The S&P 500 Index reached its all-time high and third consecutive week of gains, with value stocks outperforming growth shares. Market volumes were low, with Wednesday marking the lowest notional session of the year and the third-lightest volume session. Walt Disney shares fell 9.5% after beating earnings estimates but warned of slowing subscriber growth and Shopify’s 18.6% drop.
Jobless claims reached their highest level
Jobless claims reached their highest level since August, reaching 231,000 in the previous week. Continued claims broke a four-week downward streak, reaching 1.79 million. The University of Michigan’s preliminary index of consumer sentiment fell to 67.4, marking its lowest level in six months, indicating a cooling of the labor market and broader economy.
Bond markets
Bond markets absorbed new supply of tax-exempt municipal bonds and Treasuries, with new deals experiencing strong demand from retail and institutional buyers. Investment-grade corporate deals saw healthy levels of oversubscription, despite the primary calendar’s second-busiest week of the year. Sentiment improved in the high yield bond market as equities traded higher.
Europe
The STOXX Europe 600 Index rose 3.01% due to better-than-expected corporate earnings and increased optimism about central bank interest rate cuts, with major stock indexes also experiencing significant gains.
BoE has maintained its key interest rate
The Bank of England (BoE) has maintained its key interest rate at 5.25%, suggesting it could ease policy in June. Deputy Governor Dave Ramsden and Swati Dhingra support a 0.25% rate cut, while the BoE predicts inflation to slow to 1.9% in 2026 and 1.6% in 2027.
Interest rate cut in June
The BoE may consider an interest rate cut in June, according to T. Rowe Price European Economist Tomasz Wieladek. Ramsden’s vote on reducing rates could be significant, and a decision to lower borrowing costs is likely.
The UK economy expanded by 0.6% in Q1 2024, overcoming a recession that began in Q2 2021, thanks to service expansion and production increases.
Riksbank in Sweden reduces key interest rate to 3.75%, first reduction since 2016. Potential two more rate cuts in second half of year.
Japan
Japan’s Nikkei 225 Index and TOPIX Index experienced marginal weekly losses, with Bank of Japan Governor Kazuo Ueda suggesting early interest rate hikes if price outlook risks arise. High U.S.-Japan interest rate differentials may hinder sustainable yen appreciation.
Yen depreciated
Despite recent currency interventions, the yen depreciated to the high-JPY 157 range against the USD, despite market participants agreeing on the need for further intervention.
BoJ’s meeting
At the BoJ’s April meeting, participants expressed a hawkish outlook, suggesting an accelerated pace of monetary policy normalization and higher interest rates. Many market participants are predicting two rate hikes within a year. However, weak economic data may delay the BoJ’s rate hike plans, as real wages fell 2.5% in March. The BoJ maintains a highly accommodative monetary policy stance.
China
Chinese stocks rose due to holiday spending, with the Shanghai Composite Index rising 1.6% and the CSI 300 gaining 1.72%. Tourism revenue increased 7.6% compared to 2023, surpassing pre-pandemic levels. Domestic revenue rose 12.7%, while international trips increased.
The private Caixin/S&P Global survey of services activity reached 52.5 in April, marking its 16th monthly expansion, while the composite purchasing managers’ index increased to 52.8, indicating overall business activity expansion.
China’s Imports–exports
China’s exports increased by 1.5% in April, aligning with consensus estimates. Exports to Southeast Asia improved, while European shipments fell. Imports climbed 8.4%, reversing March’s 1.9% decline. The overall trade surplus increased to USD 72.35 billion.
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