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Market Insights

Market Insights - Week 16

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.

The stock market closed the week with gains, driven by positive inflation reports that outweighed concerns about the economy's slowing growth. The top-performing sectors were materials and industrials, while technology shares saw a decline due to NVIDIA's poor performance. The start of quarterly earnings season saw JPMorgan Chase, Wells Fargo, and Citigroup beating consensus estimates, but analysts predict a 6.5% YoY decline in Q1 earnings for the S&P 500, except for the financials sector, which is expected to see a moderate increase. The Labor Department's release of the consumer price index for March showed a slow rise of 0.1%, with the YoY rate at 5%, the slowest since May 2021. The core producer price index also declined 0.1%, indicating better prices for consumers. However, Chief U.S. Economist Blerina Uruçi believes it's premature to expect substantial rate cuts from the Fed by year-end.

European stocks saw gains as concerns of a recession decreased, with the STOXX Europe 600 Index rising by 1.74% over the five trading days ending on April 14th. Eurozone industrial production rose in February, driven by higher output of capital goods and nondurable consumer goods. The UK GDP remained flat in February but expanded by 0.4% in January, while the French Constitutional Council backed a law to increase the pension age, raising the likelihood of public protests.

In Japan, the Nikkei 225 Index rose by 3.54% and the broader TOPIX Index was up by 2.71%. Investor sentiment was boosted by Berkshire Hathaway's announcement of increasing its investments in Japan and dovish comments from the new Bank of Japan Governor, Kazuo Ueda. Although Ueda dampened expectations of major monetary policy changes, he signaled that a revision of the central bank's large-scale easing stance could be considered soon. The IMF revised Japan's 2023 economic growth projection downward to 1.3% from 1.8%. In China, inflation eased for the second straight month, raising expectations of further monetary easing.

Overall, while there were some positive developments in the markets this week, caution is still advised for investors.

Bas Kooijman

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