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1004 2023

Market Insights

Market Insights - Week 15

Bas Kooijman

As we start a new week, let's take a look at the significant events in the global economy over the past week with our weekly financial update, presented by Bas Kooijman, the CEO and Asset Manager of DHF Capital SA.

According to T. Rowe Price traders, the U.S. markets experienced volatile trading during the holiday-shortened week, despite some weak economic data and limited issuance. Some benchmarks ended mostly lower as investors took a break after the previous week's quarter-end "window dressing," which institutional investors used to adjust their holdings. The Institute for Supply Management's gauge of March factory activity decreased, and its services sector gauge indicated slower-than-expected expansion. Although job openings declined in February, the number of people quitting their jobs increased, which some economists view as a more reliable indicator of the overall health of the labor market. ADP's tally of private sector jobs showed job growth continuing but at a slower pace. However, a Federal Reserve official and a leading bank executive's downbeat statements weighed on sentiment. Despite mixed performance across sectors, the municipal and investment-grade corporate bond markets were supported by relatively light dealer inventories and below-average supply.

In Europe, shares ended the week on a positive note as concerns about a potential banking crisis subsided. The pan-European STOXX Europe 600 Index finished the week up 0.90% in local currency terms, but major stock indexes were mixed. The European Central Bank's President Christine Lagarde and other policymakers hinted at further interest rate hikes due to inflationary pressures, while others believe that rates may be nearing their peak. The EU's housing prices fell for the first time since 2015, while producer prices dropped for the fifth consecutive month due to subsiding energy prices. German industrial production increased unexpectedly in February due to strong demand for heavy vehicles and autos. Bank of England's Chief Economist, Huw Pill, suggested that policymakers face a close decision on whether to raise interest rates for a 12th consecutive time in May.

Japanese stocks saw a decline last week due to concerns about global recessionary conditions. The Nikkei 225 Index and the TOPIX Index were both down. The Bank of Japan's Tankan survey also showed a decline in business sentiment among big manufacturers in the first quarter, while big non-manufacturing enterprises benefited from rising inbound consumption. However, the G7 economies, which include Japan, agreed to cooperate on technology export controls to address the potential misuse of leading-edge technologies. Meanwhile, Chinese stocks advanced due to a recovery in services activity and the property sector. Increased demand was attributed to an array of stimulus measures that China's central and local governments rolled out.

Overall, the global markets experienced a mixed week with varying economic data and factors influencing investor sentiment.

Bas Kooijman

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