Global stock markets clawed back some of their recent losses this week following easing tensions in the Middle East and some impressive corporate earnings statements.
However, gains were limited by the publication of data on Thursday from the United States indicating a slowdown of growth and persistent inflationary pressures. The threat of “stagflation” in the US has investors worried that interest rates may need to be maintained at their current high levels for longer, causing further damage to the American economy. Elsewhere, equity markets in the UK and China were the week’s top performers, having lagged behind their regional and global counterparts for much of the past 12 months.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.3% up for the week so far, with the S&P 500 gaining 1.6%. It has been a week of two halves for US stocks, with gains on Monday and Tuesday driven by signs that recent military action involving Israel and Iran was not likely to escalate. However, figures published on Thursday showed US GDP had fallen to 1.6% in the first three months of the year, well below analysts’ 2.4% estimate. In the corporate sector the news was more upbeat, with strong results from consumer-facing businesses and a leading manufacturer of electric vehicles.
UK
In the UK, the FTSE 100 ended Thursday 2.3% up for the week so far after hitting successive all-time high closes on hopes of imminent interest rate cuts. The probability of the Bank of England loosening monetary policy before the Fed has caused the pound to drop further against the dollar, and with many of Britain’s largest companies earning revenues internationally, this added to their value. After a Bank official said inflation was likely to remain below target over the next three years, UK investors are now pricing in an initial rate reduction in August. Recent economic data showed a continued rebound from last year’s mild recession, while a new round of takeover activity also helped to lift the market.
Europe
In Frankfurt, the DAX index ended Thursday’s session up 1.1% for the week, while France’s CAC 40 slipped back slightly, losing 0.1%. There are growing signs from Germany that the economy is on the right track, with the latest business activity survey indicating green shoots of recovery, while confidence among the country’s private sector firms is also on the up. However, the eurozone’s recent economic difficulties have been reflected in some disappointing first-quarter earnings figures from consumer goods companies.
Asia
In Asia, the Hang Seng index in Hong Kong gained 6.5% as shares continued to recover some of the losses experienced around the turn of the year. Reports showing the extent of the Chinese government’s recent support for the country’s stock markets helped to lift prices, as did further outlook upgrades from two major international investment banks. Japan’s Nikkei 225 index of leading shares, meanwhile, advanced 1.5% but remains well off March’s highs. The country’s technology stocks in particular have had a difficult week as investors await potential monetary tightening from the Bank of Japan.
April 19 | April 25 | Change (%) | |
|---|---|---|---|
FTSE 100 | 7895.9 | 8078.9 | 2.3 |
FTSE 250 | 19391.3 | 19602.0 | 1.1 |
S&P 500 | 4967.2 | 5048.4 | 1.6 |
Dow Jones | 37986.4 | 38085.8 | 0.3 |
DAX | 17737.4 | 17923.8 | 1.1 |
CAC 40 | 8022.4 | 8016.7 | -0.1 |
ACWI | 743.3 | 755.9 | 1.7 |
Hong Kong Hang Seng | 16224.1 | 17284.5 | 6.5 |
Nikkei 225 | 37068.4 | 37628.5 | 1.5 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 25 April 2024.
