Global stock markets have had a difficult week following the Easter break, with conflicting economic data and further rises in commodity prices creating uncertainty for investors.
Share prices have eased off their recent highs with signs that central bankers may delay this year’s widely expected interest rate cuts.
In the United States, stronger-than-expected manufacturing data published on Monday was followed on Wednesday by reports of a surprisingly large rise in new jobs last month. This led Federal Reserve chair, Jerome Powell, to warn markets that cuts were not yet in sight. Powell and his counterpart at the European Central Bank (ECB), Christine Lagarde, this week took the unusual step of asking major technology companies to exercise restraint in pricing their services in order to keep inflationary pressures in check. However, both the Fed and the ECB will have been disappointed to see further increases in oil and commodity prices following renewed tensions in the Middle East and improving industrial data from China.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 3% down for the week so far, with the S&P 500 falling 2%. Signs of ongoing resilience in the US employment market – and the potential for rising wages to drive inflation – have preoccupied investors and central bankers, with a number of Fed officials making cautious comments as a result. Underwhelming trading figures from a major electric vehicle manufacturer also weighed on sentiment, with the company reporting a significant impact caused by recent disruption to Middle East shipping routes.
UK
In the UK, the FTSE 100 closed on Thursday 0.3% up for the week so far after figures published on Thursday showed continued expansion in Britain’s services sector. The data raised hopes that the UK’s recession could be short-lived, but the Bank of England may be concerned by signs of rising input costs and wages among services firms. London’s mining companies, meanwhile, benefited from rising metal prices while car sales in Britain were reported to have reached their highest level since 2019. However, disappointing property price data highlighted the fact that a full recovery in the housing sector remains some way off.
Europe
In Frankfurt, the DAX index ended Thursday’s session down 0.5% for the week, while France’s CAC 40 fell 0.7%. Both indexes have slipped back from recent record highs. News on Wednesday that inflation in the eurozone is easing more quickly than expected raised hopes that the ECB might cut interest rates at its next meeting. But these were dampened to some extent by the news on Thursday that growth in the bloc’s services and manufacturing sectors was showing surprising signs of resilience.
Asia
In Asia, the Hang Seng index in Hong Kong gained 1.1% after latest figures indicated a return to growth for China’s manufacturing sector. February’s rise in output represents the first month of expansion in almost a year. Tokyo’s Nikkei 225 index of leading shares fell 1.5% after Tuesday’s earthquake in Taiwan raised fears that Japan could be hit by a tsunami. The disaster also prompted concerns among Japanese investors about the knock-on effects of disruption in the Taiwanese semiconductor industry.
March 29 | April 4 | Change (%) | |
|---|---|---|---|
FTSE 100 | 7952.6 | 7975.9 | 0.3 |
FTSE 250 | 19884.7 | 19873.2 | -0.1 |
S&P 500 | 5254.4 | 5147.2 | -2.0 |
Dow Jones | 39807.4 | 38597.0 | -3.0 |
DAX | 18492.5 | 18402.4 | -0.5 |
CAC 40 | 8205.8 | 8151.6 | -0.7 |
ACWI | 783.6 | 773.4 | -1.3 |
Hong Kong Hang Seng | 16541.4 | 16725.1 | 1.1 |
Nikkei 225 | 40369.4 | 39773.1 | -1.5 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 4 April 2024.
