Market Monitor – 5 May 2023
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Market Monitor – 5 May 2023

It has been a nervous week for global stock markets as fears about the resilience of the financial sector re-emerged, while central banks in the United States and Europe once again raised interest rates in their battle to bring inflation under control

Investor sentiment has also been hit by the latest signs that the US economy is starting to slow, as well as by the looming prospect of a default by the American government as lawmakers in Congress remain deadlocked over the US debt ceiling.

United States

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 2.8% lower for the week so far, with the S&P 500 shedding 2.6%. Under other circumstances, a relatively small rate hike by the Federal Reserve and comments from policymakers suggesting the current rate-raising cycle could be at an end might have prompted a more positive reaction from equity markets. However, sentiment in recent days has been dominated by a succession of reports about the vulnerability of several US regional banks, where balance sheets have come under increasing pressure from the tighter monetary policy of the past 12 months.

Though the problems that emerged initially in early March have yet to directly affect any of the country’s major lenders, many investors worry that it is only a matter of time before a household name is drawn into the crisis. The latest economic data suggests the US labour market is finally starting to weaken, and there is no sign of agreement in Washington between Republicans and Democrats on raising the current government debt limit, which is on course to be reached at some point in the summer.

UK

In the UK, the FTSE 100 closed on Thursday 2.1% down for the week so far with share prices in London under pressure from financial services sector anxieties. A further fall in the price of oil and other commodities hit the FTSE’s energy and mining stocks as fears of a global slowdown increased. Despite the recent drop in crude oil values, the UK’s two largest petroleum producers reported bumper profits, sparking demands for a new windfall tax. Meanwhile, there was encouraging news from Britain’s beleaguered property market, with house prices returning to growth in April and mortgage approvals rising to a five-month high.

Europe

In Frankfurt, the DAX index ended Thursday’s session down 1.2% for the week, while France’s CAC 40 lost 2%. Shares across the eurozone were held back by banking sector worries, while comments from European Central Bank president, Christine Lagarde, suggested that this week’s 25 basis point rate increase was unlikely to be the year’s last. Lagarde also criticised some of the eurozone’s biggest companies for using high inflation as an excuse to raise prices at an unreasonable pace.

Asia

In Asia, the Hang Seng index in Hong Kong gained 0.3%, with investors seemingly less concerned about reports of struggling US banks. China’s financial firms had a strong week in terms of share price performance, while the International Monetary Fund said the country’s return to growth was likely to drive business activity across the whole of Asia throughout 2023. Meanwhile, Japan’s Nikkei 225 index of leading shares advanced 1% following the Bank of Japan’s decision at the end of last week to keep interest rates at their current low level.

28 April
4 May
Change (%)
FTSE 100
7870.6
7702.6
-2.1
FTSE 250
19425.1
19244.9
-0.9
S&P 500
4169.5
4061.2
-2.6
Dow Jones
34098.2
33127.7
-2.8
DAX
15922.4
15734.2
-1.2
CAC 40
7491.5
7340.8
-2.0
ACWI
655.0
644.3
-1.6
Hong Kong Hang Seng
19894.6
19948.7
0.3
Nikkei 225
28856.4
29158.0
1.0

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 4 May 2023.

5 May 2023
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Market Monitor – 5 May 2023

Important information

For marketing purposes.

This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

In the UK: issued by Threadneedle Asset Management Limited, registered in England and Wales, No. 573204. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority.

In Singapore: Issued by Threadneedle Investments Singapore (Pte.) Limited, 3 Killiney Road, #07-07, Winsland House 1, Singapore 239519, which is regulated in Singapore by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289). Registration number: 201101559W. This advertisement has not been reviewed by the Monetary Authority of Singapore.

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Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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Important information

For marketing purposes.

This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk. Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

In the UK: issued by Threadneedle Asset Management Limited, registered in England and Wales, No. 573204. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority.

In Singapore: Issued by Threadneedle Investments Singapore (Pte.) Limited, 3 Killiney Road, #07-07, Winsland House 1, Singapore 239519, which is regulated in Singapore by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289). Registration number: 201101559W. This advertisement has not been reviewed by the Monetary Authority of Singapore.

In Hong Kong: Issued by Threadneedle Portfolio Services Hong Kong Limited 天利投資管理香港有限公司. Unit 3004, Two Exchange Square, 8 Connaught Place, Hong Kong, which is licensed by the Securities and Futures Commission (“SFC”) to conduct Type 1 regulated activities (CE:AQA779). Registered in Hong Kong under the Companies Ordinance (Chapter 622), No. 1173058.

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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