Global stock markets largely made steady gains this week as central banks remain on course to start relaxing monetary policy in the next few months.
According to the latest economic indicators there seems to be little reason for policymakers to keep interest rates at their current elevated level: inflation expectations continue to decline, and even the US jobs market – which has been surprisingly resilient in recent months – is starting to show some signs of weakness. An extension of OPEC (Organization of the Petroleum Exporting Countries) production cuts threatened to drive fresh increases in prices at the start of the week – a development that could lead to a rise in inflationary pressures. However, concerns about slowing global growth this year helped keep crude values in check.
United States
On Wall Street, the S&P 500 had gained 0.4% by Thursday’s close to reach another all-time high, although the Dow Jones Industrial Average ended trading 0.8% lower. Technology sector exuberance was relatively unharmed by news at the start of the week that regulators in the European Union had fined a major American electronics company almost US$2 billion (£1.56 billion) for anti-competitive practices in the music-streaming market. Comments to lawmakers from Federal Reserve chair, Jerome Powell, helped reassure investors that interest rate cuts were imminent, and markets currently expect the Fed to make its first downward move in June.
UK
In the UK, the FTSE 100 closed on Thursday 0.1% up for the week so far after latest data showed continued strength in Britain’s services sector. This suggested that the recession of the final six months of 2023 could be relatively short lived. In contrast, figures from the retail sector indicated further weakness in consumer spending in February, while corporate earnings statements from the construction industry highlighted the ongoing impact of higher borrowing costs. Chancellor Jeremy Hunt’s Budget statement on Wednesday did little to meaningfully change market sentiment, although the government is planning to introduce a British ISA (individual savings account), which will offer additional tax relief on investments in securities issued by UK-based entities.
Europe
In Frankfurt, the DAX index ended Thursday’s session up 0.6% for the week, while France’s CAC 40 gained 1%. European stocks reached new highs after the European Central Bank gave its strongest indication yet that interest rate cuts were around the corner. Policymakers again left rates on hold at Thursday’s meeting, but the ECB cut its inflation and growth forecasts for the eurozone in 2024. All eyes are now on the organisation’s next meeting in April.
Asia
In Asia, the Hang Seng index in Hong Kong fell 2.2% on concerns about growing geopolitical tension. In a key annual speech, government officials announced an increase in defence sector spending and appeared to remove a commitment to a peaceful resolution of the Taiwan question. However, there was some positive news in the shape of an unexpectedly strong increase in exports in February. Japan’s Nikkei 225 index of leading shares, meanwhile, declined 0.8% after breaching the 40,000-point barrier for the first time on Monday. Growing expectations of a Bank of Japan interest rate hike caused stocks in Tokyo to fall back towards the end of the week.
March 1 | March 7 | Change (%) | |
|---|---|---|---|
FTSE 100 | 7682.5 | 7692.5 | 0.1 |
FTSE 250 | 19354.4 | 19584.0 | 1.2 |
S&P 500 | 5137.1 | 5157.4 | 0.4 |
Dow Jones | 39087.4 | 38791.4 | -0.8 |
DAX | 17735.1 | 17842.9 | 0.6 |
CAC 40 | 7934.2 | 8016.2 | 1.0 |
ACWI | 767.1 | 773.1 | 0.8 |
Hong Kong Hang Seng | 16589.4 | 16229.8 | -2.2 |
Nikkei 225 | 39910.8 | 39598.7 | -0.8 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 7 March 2024.
