Week 17 in Brief
How did the US market perform?
- On Friday, the Dow Jones Industrial Average surged, achieving its strongest monthly performance since January. The blue-chip index closed at 34,098.16, up 272 points or 0.8%. In April, the Dow climbed 2.5%, marking its best monthly showing since January, when it increased by 2.8%.
- The S&P 500 closed at 4,169.48, rising by 0.83%, and achieved a monthly gain of 1.5%, marking its second consecutive positive month.
- Investors analyzed the latest round of technology earnings, causing the Nasdaq Composite to rise by 0.69%, ending at 12,226.58.
- Amazon’s shares fell nearly 4% after the company reported that its cloud business had decelerated, despite beating Wall Street’s revenue expectations for the first quarter.
- On the other hand, Intel’s shares surged by 4% after exceeding estimates on both top and bottom lines.
- First Republic Bank’s shares nosedived by more than 43% after a report by CNBC’s David Faber suggested that the Federal Deposit Insurance Corporation may take receivership for the regional bank. The stock has plummeted by over 97% since the start of the year.
- Inflation concerns persisted, with the personal consumption expenditures price index increasing by 0.3% in March, in line with economist projections. The index is a crucial inflation indicator for the Federal Reserve, which is scheduled to hold a policy meeting next week.
How did the European markets perform?
- On Friday, European shares underwent a late-day rebound, thanks to positive earnings and a rise in oil stocks.
- The main STOXX 600 index managed to overcome gloomy euro zone data and a decline in bank stocks. The index recorded a 0.6% gain, with a total increase of 1.9% this month, mainly due to improved earnings. This comes after a turbulent March that saw the collapse of two U.S. regional lenders and the Swiss state-sponsored rescue of Credit Suisse.
- Defensive sectors such as real estate and healthcare outperformed other major European sectors for the month, with rises of 5.2% and 4.7%, respectively. Meanwhile, the tech and mining sectors recorded the most significant monthly declines, down 4.7% and 5.6%.
- Electrolux AB experienced a significant jump of 15.5% following its Q1 sales report, which exceeded market expectations, including its operating loss.
- Mercedes-Benz Group AG also experienced a 0.7% rise after the German automaker’s Q1 results were slightly more optimistic.
- Earlier in the day, stocks had fallen after preliminary data revealed that the euro zone’s growth in the first three months of 2023 was minimal and lower than market expectations, after stagnation at the end of last year. “Data released on Friday confirmed that the euro-zone economy was broadly stagnant in Q4 and Q1,” wrote Jack Allen-Reynolds, deputy chief euro-zone economist at Capital Economics in a note.
How did Asian markets perform?
- On Friday, the Asia-Pacific markets experienced significant gains as a result of the Bank of Japan’s decision to maintain its monetary policy, which was led by new governor Kazuo Ueda.
- The Japanese markets saw increases across the board, with the Nikkei 225 rising by 1.4% to close at 28,856.44, and the Topix climbing 1.23% to finish at 2057.48. The Japanese yen weakened by 0.8% against the US dollar, reaching 134.9.
- In Australia, the S&P/ASX 200 rose by 0.36%, closing at 7,318.7, while the South Korean Kospi saw a slight increase of 0.23% to finish at 2,501.53. The Kosdaq, on the other hand, ended 0.87% lower at 842.83.
- During the final hour of trading, the Hang Seng index in Hong Kong increased by 0.42%, while the Hang Seng Tech index jumped by 1.12%.
- In mainland China, the Shenzhen Component ticked up by 1.08% to reach 11,338.67, and the Shanghai Composite rose by 1.14% to close at 3,323.27.
Bonds and Commodities
- On Friday, U.S. Treasury yields decreased as investors considered important economic data that could influence the Federal Reserve’s forthcoming policy decision. The 10-year Treasury yield fell by nearly 9 basis points and was at 3.439%. Similarly, the yield on the 2-year Treasury was down by around 6 basis points, standing at 4.037%.
- Oil prices saw a rise of over 2% on Friday, following positive earnings from energy firms and a decrease in crude output in the US, as fuel demand increased.
- Brent futures for June delivery rose $1.13, or 1.49%, to $79.50 a barrel, marking the last day as the front-month. The July contract showed a stronger trading performance, with an increase of about 2.8% at $80.40.
- US West Texas Intermediate crude also saw a rise, with an increase of $2.02, or 2.7%, settling at $76.78.
- Gold prices bounced back, with renewed concerns over the US banking turmoil and a dip in yields, making it the second monthly rise despite steady US inflation, reinforcing bets for an interest rate hike next week.
- Spot gold was 0.1% higher at $1,989.91 per ounce, with an increase of about 1.1% for the month, while US gold futures settled unchanged at $1,999.10.
- Other precious metals, such as silver and platinum, remained stable, with palladium gaining 0.1% to $1,496.47, all set to mark their second monthly advances.
- On Friday, the US dollar increased as inflation data for March revealed a slower growth rate, which reinforced the Federal Reserve’s plan to raise interest rates at its upcoming monetary policy meeting next week.
- Conversely, the Canadian dollar strengthened against the US dollar, bouncing back from a one-month low as investors adjusted their currency hedges to account for portfolio changes.
- The yen declined across the board after the Bank of Japan unanimously decided to maintain its yield curve control policy and ultra-low interest rates, as expected.
- Sterling also climbed against the yen to a six-month high after the Bank of Japan left its monetary policy unchanged. It rose 1.2% against the yen to as high as 169.47, its highest since early November 2022.
- The euro slipped 0.1% against the dollar, trading at $1.1017.
Next week will be eventful as the earnings season continues, with several companies such as Pfizer, Starbucks, Uber Technologies, AMD, Qualcomm, Apple, Royal Dutch Shell, BP, and ConocoPhillips, among others, set to release their reports.
Warren Buffett’s holding company, Berkshire Hathaway, will hold its annual shareholders’ meeting in Omaha, Nebraska, on Saturday.
Updates on the labor market will be provided through the latest Job Openings and Labor Turnover Survey (JOLTS), ADP’s National Employment Report, and the April nonfarm payrolls report.
Federal Reserve policymakers will gather for a two-day meeting of the Federal Open Market Committee (FOMC) starting on Tuesday.
The FOMC is expected to make an interest rate decision on Wednesday, which will likely mark the final rate hike of the current tightening cycle.