Week 18 in Brief
How did the US market perform?
- Friday saw a remarkable surge in U.S. stocks, with the Dow experiencing its largest single-day percentage gain since January 6th. This upward momentum was primarily fueled by Apple’s shares skyrocketing by over 4% following positive quarterly results.
- The Dow Jones Industrial Average rose 546.64 points, or 1.65%, to 33,674.38, the S&P 500 gained 75.03 points, or 1.85%, to 4,136.25 and the Nasdaq Composite added 269.02 points, or 2.25%, to 12,235.41.
- Investors, previously concerned about a potential recession, were elated by Apple’s quarterly performance, causing the stock to reach its highest level in approximately nine months. Ultimately, Apple’s shares ended the day with an impressive 4.7% increase, marking its most significant daily percentage gain since November.
- In the midst of banking turmoil and an economy showing signs of deceleration, the U.S. Labor Department’s report delivered better-than-expected job growth for April. This report revealed an unemployment rate of 3.4%, surpassing estimates of 3.6% and matching the lowest level recorded since 1969.
- The Cboe Volatility index experienced its most substantial one-day decline since March 16th, signifying a decrease in market volatility.
- Earlier in the week, as anticipated, the U.S. central bank raised rates by 25 basis points. However, Federal Reserve Chair Jerome Powell emphasized that it was premature to definitively declare the end of the rate-hike cycle due to lingering concerns about inflation.
How did the European markets perform?
- European shares concluded the week on a positive note, supported by the strong performance of HSBC shares and an uptick in oil prices, although the overall week saw a decline amidst significant central bank meetings and substantial earnings reports.
- The STOXX 600 index, representing European stocks, closed 1.1% higher on Friday. The oil & gas sector index led the gains, rising 2.7% as crude prices strengthened.
- HSBC experienced a 2.7% increase after successfully fending off a proposal to split the bank and separate its profitable Asian business during its annual investor meeting in Birmingham, England. However, the bank still faced opposition from some shareholders concerning its board and executive compensation.
- German chemical companies witnessed a surge in their share prices following the government’s announcement of energy subsidies aimed at assisting the country’s industrial sector.
- Throughout the week, media stocks experienced the most significant decline, dropping 5.8% in their worst performance in over three years. On the opposite, defensive food & beverage stocks rose 1.2%, leading the week’s gains.
How did Asian markets perform?
- In the Asia-Pacific region, the performance of markets was varied as concerns about the banking sector resurfaced on Wall Street, causing the three major U.S. indexes to experience a four-day losing streak. This led to a sell-off in regional bank shares, resulting in the SPDR S&P Regional Bank ETF dropping over 5% and some banks experiencing volatile trading.
- In Australia, the S&P/ASX 200 initially faced losses but managed to recover and ended the day with a 0.37% increase, closing at 7,220. Investors in Australia were processing the statement on monetary policy released by the Reserve Bank of Australia.
- Indian shares declined on Friday, erasing the gains made earlier in the week, primarily due to weakness in financial stocks such as Housing Development Finance Corp and HDFC Bank. Persistent concerns surrounding the U.S. banking sector also contributed to the decline.
- Meanwhile, Hong Kong’s Hang Seng index experienced a 0.38% rise, leading the gains in the region. In mainland China, the Shanghai Composite slipped by 0.48% and closed at 3,334.5, while the Shenzhen Component fell by 0.83% and ended at 11,180.87.
- China’s Caixin services purchasing managers index (PMI) for April declined to 56.4 from March’s reading of 57.8, although it remained in expansion territory. On the other hand, the Caixin manufacturing PMI fell into contraction territory.
Bonds and Commodities
- Oil prices increased on Friday but experienced a third consecutive weekly decline following a significant drop earlier in the week. This decline was attributed to expectations of rising benchmark interest rates and concerns over the U.S. banking crisis, which could potentially slow down the economy and reduce fuel demand.
- Brent crude concluded the day at $75.30 per barrel, marking a notable increase of $2.80 or 3.9%. Similarly, U.S. West Texas Intermediate saw a positive shift, settling at $71.34 per barrel, reflecting a gain of $2.78 or 4.1%. These gains came after four days of continuous decreases that drove the contract to its lowest point since late 2021.
- In the Treasury market, the benchmark 10-year notes saw a rise of 7.9 basis points, reaching 3.431% compared to the previous day’s 3.352%. The 30-year bond experienced a smaller increase of 2.4 basis points, resulting in a yield of 3.7464%. The 2-year note observed a more significant rise of 18.7 basis points, producing a yield of 3.9139%.
- Gold encountered a rapid decline following the release of stronger-than-anticipated U.S. payrolls data, which tempered expectations of potential interest rate cuts by the Federal Reserve. Despite this retreat, spot gold managed to achieve a 1.3% increase for the week, surging to $2,072.19 on Thursday, approaching its all-time high of $2,072.49. The surge came in response to the Fed’s suggestion that its cycle of rate hikes might be coming to an end. Conversely, U.S. gold futures settled 1.5% lower at $2,024.80.
- As for other precious metals, silver experienced a 1.8% decline, reaching $25.60 per ounce. Platinum demonstrated a 1.7% increase, reaching $1,057.25, while palladium showed the strongest gain of 3.4%, settling at $1,496.96.
- On Friday, the dollar relinquished its earlier gains against the euro but remained stronger against the yen. This was in response to April’s job gains and wage growth exceeding economists’ predictions, although it also revealed downward revisions for March’s employment figures.
- The euro experienced a decline against the pound, reaching its lowest point since December 20 at 87.11 pence.
- In contrast, the Canadian dollar reached a two-week high against its U.S. counterpart on Friday. This occurred as investors tempered their expectations of interest rate cuts by the Bank of Canada in the upcoming months, due to stronger-than-anticipated domestic job data.
- Bitcoin’s value has remained stagnant, staying at the same level as the previous weekend. It currently hovers around $28,820, reflecting a 5% decrease from its April peak of $30,979, which occurred almost three weeks ago. Nevertheless, it still maintains a substantial increase of approximately 77% since the beginning of January when it was priced at $16,615.
- Ethereum experienced a 4.2% increase in value over the past week and is presently valued at $1,885. However, this signifies a decline of about 7% from its highest point in 2023, which was $2,129 in mid-April. Nonetheless, it has still risen by 66% since January 1 when it was priced at $1,197.
Following a hectic week featuring corporate earnings, jobs reports, and the recent FOMC meeting, the upcoming week is anticipated to be comparatively calmer. Notable events include the release of earnings reports from PayPal, Airbnb, The Walt Disney Company, Electronic Arts, as well as leading automakers Toyota and Honda, among others.
Additionally, the latest inflation data will be unveiled through the Consumer Price Index (CPI) and Producer Price Index (PPI) for the month of April.
Furthermore, the Bank of England (BoE) will convene a significant meeting on interest rates on Thursday, while a gross domestic product (GDP) reading from the U.K. is expected on Friday.