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.

Despite recent shifts and stumbles, we believe there's always room for cautious optimism and strategic action. Let's delve into the happenings of the past week across the major global markets.

The US markets closed lower last week, breaking from their consistent winning streak. Nasdaq Composite and S&P 500 Index experienced their first declines in two months and six weeks, respectively. Even so, growth stocks outshone value shares, and large-cap stocks demonstrated better performance than their small-cap counterparts. Market activity was relatively subdued, which could be attributed to the annual rebalancing of the Russell indexes.

Fed Chair Jerome Powell's hint at potential rate hikes cast a shadow over the market's sentiment. Although futures markets remain skeptical about this likelihood, recent events like the accelerated rate hikes by the Bank of England and Norges Bank, Norway’s central bank, heighten the rate hike fear.

Nonetheless, there was good news in the housing sector, with housing starts reaching their highest level in over a year, surpassing forecasts. The FDIC's sale of recently acquired assets from distressed banks also spurred strong demand, indicating a robust secondary market. All in all, the US market experienced minor turbulence, but a resilient undercurrent remains evident.

In Europe, concerns over potential interest rate hikes led to a dip in the STOXX Europe 600 Index. Similarly, major stock indexes, including Germany’s DAX, France’s CAC 40 Index, Italy’s FTSE MIB, and the UK’s FTSE 100 Index, all encountered a downturn.

An unexpected turn of events saw the Bank of England (BoE) increase its key interest rate to 5.0%, a move prompted by unexpectedly strong inflation data. Moreover, the central banks of Switzerland and Norway also increased their interest rates, a move to keep inflation in check.

Despite these unsettling trends, there were signs of hope. Germany's producer prices rose at their slowest pace since July 2021, indicating potential inflation easing. Furthermore, the Eurozone business output saw a slight expansion, denoting some resilience in the economy.

In Japan, both the Nikkei 225 Index and TOPIX Index took a step back from their recent highs. The yen weakened against the U.S. dollar, and Japan's core CPI rose higher than forecast. However, in the face of these adjustments, the Bank of Japan (BoJ) maintains its commitment to ultra-loose monetary policy, providing a safety net for the market.

Despite the retreat of the Chinese markets and ongoing recovery challenges, Beijing unveiled a tax break package for electric vehicle purchases, signalling a proactive approach to stimulating market demand. Chinese banks' decision to lower their prime rates also aligns with the People's Bank of China's latest cuts, offering a slight relief to the economy.

In conclusion, while there have been visible shifts and pauses in the global financial landscape, there are opportunities nested within these transitions. At DHF Capital SA, we continue to monitor these changes, ensuring we align our strategic actions to meet the demands of a fluctuating market. Our focus remains steadfast on unearthing opportunities and maximising your investments. Stay tuned for more updates, and let's navigate these waters together.