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Weekly Market Recap

15 April, 2024


Our Multi-Asset Solutions team produce a weekly market recap which aims to summarise the previous week’s major events and developments that may impact markets. They try to include points that may aid you in your decision making or conversations with clients. This is supplemented by a market data sheet, offering a summary of financial market performance. Last week’s summary is below. 

Economic and political backdrop

The UK

UK GDP in February expanded 0.1% sequentially, thanks to a rebound in manufacturing output. The Office of National Statistics also revised January GDP growth 0.3% from 0.2%, suggesting the economy exited recession. In the three months through February, GDP expanded 0.2%.

The US

The primary factor weighing on sentiment last week appeared to be Wednesday morning’s release of the Labor Department’s consumer price index (CPI) data, showing headline prices rising by 0.36% in March, right in line with February’s increase, in contrast with consensus hopes for a small decline from the month-earlier pace. A rebound in the price of medical services (from -0.1% in February to 0.6% in March) was partly to blame, as was a continuing sharp rise in transportation services costs, which rose 10.7% over the preceding 12 months – fed largely by increases in the cost of car insurance. Overall inflation rose 3.5% over the preceding 12 months, its biggest gain since September.

More concerning may have been a material increase in so-called supercore inflation, which tracks services prices excluding energy and housing costs, which policymakers have acknowledged are a lagging indicator of overall inflation trends. Supercore inflation jumped 0.7% in March and 4.8% over the past 12 months, substantially higher than expectations and its biggest increase in 10 months.

In the wake of the report, futures markets began pricing in roughly a 20% chance of a rate cut at the June policy meeting of the Federal Reserve (Fed) versus roughly 50% before its release. The week was a busy one for commentary from central bank officials – with 11 scheduled to speak – and they seemed to confirm a change in their perspective following the CPI release. In particular, Richmond Fed chief Thomas Barkin said that the latest data did not increase his confidence in disinflation, and Boston Fed President Susan Collins said that the recent data argued against an imminent need to cut rates.

Thursday’s release of producer price inflation data seemed to help calm inflation fears and help equity markets recoup a portion of their losses. Producer prices rose 0.2% in March, a tick below expectations and well under February’s 0.6% increase. Input goods prices fell -0.1%, continuing a recent pattern of goods deflation that had been interrupted by a 1.2% surge in April.

Stocks pulled back sharply to end the week, however, in the wake of reports that Iran was preparing to directly attack facilities on Israeli soil for the first time. Oil prices rose on the news, along with the US dollar, which is typically viewed as a “safe haven” in times of international turmoil. Meanwhile, the CBOE Volatility Index (VIX), Wall Street’s so-called fear gauge, spiked to its highest level since November.


The European Central Bank (ECB) left its key deposit rate at a record high of 4.0%, as expected, but Christine Lagarde, President of the ECB, said that if an updated inflation assessment, which is due in June, “were to increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction.” Asked if the strong US inflation data would affect the policy path, she replied that the ECB was “data-dependent, not Fed-dependent” and that US and eurozone inflation were “not the same.”

Investor confidence in the eurozone rose in April to its highest level in more than two years, according to an index compiled by Sentix. The economic expectations barometer turned modestly positive for the first time since Russia invaded Ukraine.

In Germany, industrial production in February rose 2.1% sequentially, the second consecutive month of strong gains, due to increased construction output. However, in the three months through February, production was -0.5% lower than in the previous period.


The Japanese yen weakened from the high-JPY 151 range against the US dollar level to beyond the 152 level that many investors have come to regard as the point at which Japanese authorities could be expected to intervene in the foreign exchange markets to prop up the currency. No such intervention was forthcoming during the week, although finance ministry authorities stated that they were looking at the factors behind the currency moves and that they would act on excessive yen weakness.

Bank of Japan (BoJ) Governor Kazuo Ueda, in turn, ruled out responding to a weak yen with a rate hike. He emphasised that the central bank would not change its monetary policy directly in response to exchange rate moves. The BoJ recently ended its negative interest rate policy and unwound its programme of yield curve control, in response to signs that prices were rising in tandem with wages, a stated precondition for monetary policy tightening. Market expectations now appear to have converged around two further rate hikes within a one-year period.

It is worth noting that Japan’s monetary policy remains among the most accommodative in the world, and expectations are that financial conditions will also remain accommodative for the time being. A combination of historic weakness in the yen and accommodative monetary policy provide a favourable backdrop for Japan’s stock indexes, where many of the largest constituents are exporters deriving a sizable share of their earnings from overseas.


China’s CPI rose a below-consensus 0.1% in March from a year earlier, down from February’s 0.7% rise, as food costs retreated following a brief increase during the Chinese New Year holiday in February. Core inflation rose by 0.6% but was weaker than February’s 1.2% increase. Meanwhile, the producer price index fell -2.8% from a year ago, marking its 18th month of declines and accelerating from February’s -2.7% drop.

China’s exports and imports fell in March and reversed gains from the first two months of the year. Exports shrank a worse-than-expected -7.5% in March from a year ago compared with a 7.1% rise in the January to February period. Meanwhile, imports dipped -1.9%, down from 3.5% growth in the first two months of the year. The latest results dealt a setback to China’s reliance on external demand to bolster its economy, adding pressure on Beijing to ramp up stimulus measures as it tries to achieve its 5% annual growth target set at the National People’s Congress in March.


Recent survey pointed to softer business conditions in March. Business confidence and forward orders remained subdued, albeit picking up slightly. Australian firms reported that capacity utilisation and profitability edged lower with reported selling price easing sharply. Australian consumer confidence also stayed weak. As for the housing market, dwelling completions fell in the fourth quarter of 2024.


Last week, the MSCI All Country World Index (MSCI ACWI) lost -1.4% (5.9% YTD).

In the US, the S&P 500 Index moved -1.5% lower (7.9% YTD) amid heightened fears of conflict in the Middle East and some signs of persistent inflation pressures that pushed long-term Treasury yields higher. Growth stocks fared better than value shares, which were weighed down by interest rate-sensitive sectors, such as real estate investment trusts (REITs), regional banks, housing and utilities, and large-caps held up better than small-caps. The Russell 1000 Growth Index returned -0.6% (10.0% YTD), the Russell 1000 Value Index -2.8% (4.5% YTD) and the Russell 2000 Index -2.9% (-0.8% YTD), suffering its biggest daily decline in almost two months on Wednesday and falling back into negative territory for the year to date. The technology-heavy Nasdaq Composite ticked down -0.4% (8.0% YTD)

In Europe, the MSCI Europe ex UK Index gave up -0.6% (6.3% YTD). Major stock indexes retreated. Germany’s DAX Index declined -1.3% (7.0% YTD), France’s CAC 40 Index weakened -0.6% (6.4% YTD) and Italy’s FTSE MIB Index slid -0.7% (11.8% YTD). Switzerland’s SMI Index lost -0.7% (4.0% YTD). The euro depreciated versus the US dollar, ending the week at USD 1.06 for EUR, down from 1.08.

In the UK, the FTSE 100 Index bucked the downtrend, gaining 1.2% (4.7% YTD), and the FTSE 250 Index added 0.2% (1.0% YTD). The British pound weakened versus the US dollar, ending the week at USD 1.25 for GBP, down from 1.26. The pound’s weakness helped support the FTSE 100, which includes many multinationals that generate meaningful overseas revenue.

Japan’s stock markets gained over the week. The TOPIX Index rallied 2.1% (17.7% YTD) and the TOPIX Small Index jumped 2.0% (11.6% YTD). As the Japanese yen hovered close to a 34-year low, investors’ focus was on whether the country’s authorities would step in to support the currency. The yen ended the weak at JPY 153.2 for USD, compared with 151.6 at the end of last week.

In Australia, the S&P ASX 200 Index edged up 0.2% (4.3% YTD) capped by market expectation of less and delayed rate cuts from the Fed and the Reserve Bank of Australia. As a result, both short-term and long-term Australian government bond rates moved higher with the curve largely unchanged. The Australian dollar reversed the gain against the US dollar in the previous week, finishing last week -1.0% lower.

MSCI Emerging Markets Index closed -0.4% lower (2.3% YTD), with a positive contribution to performance from the stock market of Taiwan and a negative contribution from those of China, South Korea and Brazil.

Chinese stocks retreated as weak inflation data underscored the lacklustre demand hanging over China’s economy. The Shanghai Composite Index was down -1.6% (1.5% YTD) and the blue-chip CSI 300 Index plunged -2.6% (1.3% YTD). In Hong Kong, the benchmark Hang Seng Index was little changed (-1.4% YTD) after apprehensions about the flagging recovery pared earlier gains.

In Poland, inflation has been surprising to the downside for several months, and that trend continued in March. The Polish government recently reported that inflation in March was measured at a year-over-year rate of 1.9%, which was lower than the 2.8% year-over-year rate in February and below consensus expectations of about 2.3%.

T. Rowe Price credit analyst Ivan Morozov believes that headline inflation likely reached a trough in March because, starting in April, the value-added tax (VAT) is being restored on some food products – which will push inflation higher. However, he expects that core inflation, which slowed to a 4.6% year-over-year rate in March, should continue falling. Despite this, central bank officials have maintained a cautious stance and have not given any indication that they plan to reduce interest rates this year.

While Morozov believes that the disinflation trend seems poised to continue, he notes that Polish economic growth is weak in a historical context, though it is slowly recovering. He also notes that “real” (inflation-adjusted) wage growth has turned positive due to falling inflation and that 12% year-over-year nominal wage growth – driven by a substantial minimum wage increase this year – is supporting a recovery in consumption. In addition, he believes both retail sales and industrial production data are demonstrating some signs of improvement.

In the Czech Republic, the government recently reported that month-over-month inflation in March slipped to 0.1% from 0.3% in February. Also, year-over-year inflation in March was 2.0%, which matched the year-over-year rate in February and was marginally below expectations.

According to T. Rowe Price credit analyst Ivan Morozov, the 2.0% inflation rate in March matches the central bank’s inflation target and is notably below policymakers’ 2.9% estimate for the month. He believes that this could give the central bank – which began reducing interest rates in December – room to reduce rates further.

Last week, the Bloomberg Global Aggregate Index (hedged to USD) returned -0.3% (-1.0% YTD), Bloomberg Global High Yield Index (hedged to USD) -0.5% (1.9% YTD) and Bloomberg Emerging Markets Hard Currency Aggregate Index -0.9% (flat YTD).

The consumer inflation data helped drive the yield on the benchmark 10-year US Treasury note to its highest intraday level since November before Treasuries rallied on Friday as investors sought out US dollar-based assets. Over the week, the 10-year Treasury yield increased 12 basis points (bp) to 4.52% from 4.40% (up 64bp YTD). The 2-year Treasury yield increased 15bp to 4.90% from 4.75% (up 65bp YTD). Both investment-grade and high yield corporate bonds wavered following the CPI report, but issuance appeared to be met with continued healthy demand.

After trending lower early in the week, yields on French, German and Italian government bonds jumped on news that US inflation had accelerated faster than expected in March. Yields subsequently pulled back from these highs as the ECB held key rates steady but hinted strongly that it might lower them soon. Over the week, the 10-year German bund yield decreased -4bp, ending the week at 2.36% from 2.40% (up 34bp YTD).

UK gilt yields rose, lifted in part by hawkish comments from Bank of England policymaker Megan Greene, who warned that “rate cuts should still be a way off.” The 10-year gilt yield rose 7bp, ending the week at 4.14% from 4.07% (up 61bp YTD).

Following a hot US inflation print and subsequent rise in US Treasury yields, the 10-year Japanese government bond yield rose to 0.85%, from 0.77% at the end of the previous week. It briefly touched its highest level since November 2023 during the week.

Yoram Lustig, CFA
Head of Multi Asset Solutions,

Michael Walsh, FIA, CFA
Solutions Strategist


Eva Wu,
Solutions Analyst


202404 - 3511064

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