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Weekly Market Recap

13 May, 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

The Bank of England (BoE) held its key interest rate steady at 5.25%, while indicating that it could ease policy as soon as June. Deputy Governor Dave Ramsden joined Swati Dhingra in voting for a rate cut of 25bp. BoE Governor Andrew Bailey also said rates may need to be reduced more than markets expect, although he emphasised that the decision would depend on incoming data. The BoE also updated its economic forecasts. It now expects inflation to slow more sharply to 1.9% in 2026 and to 1.6% in 2027.

The BoE signalled that an interest rate cut in June is on the table, according to T. Rowe Price European Economist Tomasz Wieladek. Ramsden’s vote for reducing rates could be important, Wieladek says. Historically, Ramsden’s voting pattern has been a leading indicator of moves by the rest of the Monetary Policy Committee (MPC). Wieladek believes that a decision to lower borrowing costs in June is likely as long as the labour market and services inflation data in the next two months do not surprise significantly to the upside.

The UK economy expanded by a much stronger-than-expected rate of 0.6% in the first quarter of 2024, exiting a recession that started in the second half of last year, according to a first estimate from the Office for National Statistics. Expansion in services and increases in production supported growth.

The US

A surprise rise in weekly jobless claims seemed to dominate the week’s sparse economic calendar – at least in the eyes of investors. The number of people claiming unemployment benefits rose to 231,000 in the week ended the previous Wednesday, its highest since last August. Likewise, continuing claims broke a four-week downward streak, rising to 1.79 million.

Friday brought another sign that the labour market and broader economy might be cooling. Before the start of trading, the University of Michigan reported that its preliminary index of consumer sentiment in May tumbled unexpectedly to 67.4, down from a final reading of 77.2 in April, marking its lowest level in six months. “While consumers had been reserving judgment for the past few months, they now perceive negative developments on a number of dimensions,” the survey’s chief researcher noted. “They expressed worries that inflation, unemployment and interest rates may all be moving in an unfavourable direction in the year ahead.”


In Sweden, the Riksbank lowered its key interest rate by 25 basis points (bp) to 3.75%, the first reduction since 2016. It said that if the outlook for slowing inflation still held, the policy rate could be cut two more times in the second half of the year.


Bank of Japan (BoJ) Governor Kazuo Ueda hinted that the central bank could raise interest rates early if upside risks to the price outlook emerge, given that inflation may have become more susceptible to the effects of weakness in the yen. With US-Japan interest rate differentials remaining very high, some observers believe that another interest rate hike is unlikely to support sustainable yen appreciation.

Over the week, the yen weakened to JPY 155.8 against the USD, from JPY 153.1 at the end of the previous week. This was despite market participants converging around the view that authorities had recently intervened on two occasions in the foreign exchange markets to prop up the yen, as suggested by the BoJ’s accounts.

The yield on the 10-year Japanese government bond finished the week broadly unchanged at 0.91%, near a six-month high. A summary of opinions expressed at the BoJ’s April meeting showed participants turning overwhelmingly hawkish, with one hinting at an accelerating pace of monetary policy normalisation. Another opined that the path for interest rates may be higher than currently priced in by the market. Many market participants are pricing in two rate hikes within a one-year period.

However, some signs of weakness in economic data may delay the BoJ’s rate hike plans. Real, or inflation-adjusted, wages fell -2.5% in March from a year earlier, worse than the previous month’s -1.8% drop. The BoJ continues to reiterate its view that a “virtuous cycle” of growth in prices rising to its 2% target accompanied by wage inflation is a precondition for further monetary policy normalisation. While the central bank has ended its negative interest rate policy, its monetary policy stance remains among the most highly accommodative in the world.


Tourism revenue over the five-day break rose 7.6% compared with the 2023 holiday and surpassed pre-pandemic levels, according to data from the Ministry of Culture and Tourism. Domestic revenue rose 12.7% from last year, while international trips also picked up. Box-office sales reached RMB 1.53 billion, roughly in line with the prior year. However, average spending per traveller fell -11.5% from 2019 as consumers remained cautious about spending.

In economic news, the private Caixin/S&P Global survey of services activity reached 52.5 in April, down from March’s 52.7, as expected, and marked its 16th monthly expansion. Readings above 50 indicate an expansion from the prior month. The Caixin/S&P composite purchasing managers’ index (PMI), which tracks both the services and manufacturing sectors, edged up to 52.8 from 52.7 in March as overall business activity expanded in April.

China’s exports rose by 1.5% in April from a year earlier, up from a -7.5% decline in March, and broadly in line with consensus estimates. Exports to Southeast Asian nations improved, while European shipments fell. Sales to the US were little changed. Imports climbed a better-than-expected 8.4% in April, reversing March’s -1.9% decline, which some analysts attributed to increased raw materials shipments rather than improved consumer demand. The overall trade surplus increased to USD 72.35 billion, up from USD 58.55 billion in March.


The Reserve Bank of Australia (RBA) left the policy rate unchanged at 4.35% as widely expected by the market. The RBA’s concerns on inflation have been lifted in recent months in response to recent data showing it is “declining more slowly than expected” with “stronger labour market conditions.” However, for now, Governor Bullock expressed the view that the cash rate is sufficiently restrictive to achieve the inflation target over a reasonable timeframe. Australian retail sales volumes fell -0.4% in the first quarter. Retail trade per capita fell even more at -1.0% as population grew 0.6% over the quarter.


Last week, the MSCI All Country World Index (MSCI ACWI) rose 1.7% (8.4% YTD).

In the US, the S&P 500 Index ended 1.9% higher (10.0% YTD), nearing its all-time high and recording its third consecutive week of gains. The other major indexes also advanced. Market volumes were especially low over much of the week, however, with Wednesday marking the lowest notional (in terms of the value of shares traded) session of the year and its third-lightest volume (in terms of number of shares traded) session. Growth stocks lagged value shares and large-caps outpaced small-caps. The Russell 1000 Growth Index returned 1.6% (11.3% YTD), the Russell 1000 Value Index 2.2% (7.6% YTD) and the Russell 2000 Index 1.2% (2.1% YTD). The technology-heavy Nasdaq Composite Index advanced 1.2% (9.1% YTD).

The quiet trading week appeared to reflect a generally light and unsurprising economic calendar, although some individual stocks moved sharply in reply to first-quarter earnings releases. Most prominently, perhaps, Walt Disney shares fell -9.5% on Tuesday after the company beat earnings estimates but warned that subscriber growth in its online streaming business was likely to slow. Likewise, a prediction for slowing revenue growth appeared to lead to an -18.6% drop in shares of online retail platform Shopify on Wednesday.

In Europe, the MSCI Europe ex UK rallied 3.4% (9.9% YTD) on better-than-expected corporate earnings and increased optimism that major central banks would soon start cutting interest rates. Major stock indexes also rose sharply. Germany’s DAX Index jumped 4.3% (12.1% YTD), France’s CAC 40 Index surged 3.4% (10.5% YTD) and Italy’s FTSE MIB Index gained 3.1% (16.6% YTD). Switzerland’s SMI Index was up 4.3% (8.5% YTD). The euro was little changed versus the US dollar, ending the week at USD 1.08 for EUR.

In the UK, the FTSE 100 Index gained 2.8% (10.7% YTD) to a fresh record high and the FTSE 250 Index added 2.4% (6.1% YTD). The British pound was little changed versus the US dollar, ending the week at USD 1.25 for GBP.

In Japan, the TOPIX Index was broadly flat (16.5% YTD) and the TOPIX Small Index firmed 1.4% (11.4% YTD).

In Australia, the S&P ASX 200 Index climbed 1.9% (4.2% YTD) on the back of softer US labour market data, less hawkish tone from the RBA, and further loosening of restrictions on purchasing property in China. Australian government bond yields abated over the week, with the curve modestly flattening. The Australian dollar remained largely unchanged versus the US dollar.

MSCI Emerging Markets Index closed 1.0% higher (5.5% YTD), with a positive contribution to performance from the stock markets of China, Taiwan and South Korea and a negative contribution from those of India and Brazil.

Chinese stocks advanced as recovery hopes rose following buoyant holiday spending during the prior week’s Labour Day holiday. The Shanghai Composite Index rose 1.6% (6.1% YTD) and the blue-chip CSI 300 Index added 1.7% (7.0% YTD). In Hong Kong, the benchmark Hang Seng Index soared 3.0% (12.2% YTD).

In Türkiye, credit ratings agency S&P Global Ratings upgraded Türkiye’s sovereign credit rating from B to B+. As reported by Reuters, the upgrade was driven by expectations for coordination between the government’s fiscal, monetary and income policies to continue improving. T. Rowe Price sovereign analyst Peter Botoucharov was not surprised by the upgrade, as it follows on the heels of a similar upgrade by Fitch Ratings in March. He notes that future upgrades to the sovereign credit rating are likely to depend on factors such as the sustained implementation of more orthodox policies, adjustments to external accounts, the rebuilding of foreign exchange reserves, and the removal of macro prudential regulations in the foreign exchange and local interest rates markets.

In Brazil, the central bank reduced its key interest rate, the Selic rate, by -25bp, from 10.75% to 10.50%. The decision was not unanimous; it was a split vote, with five policymakers favouring a -25bp rate cut while four preferred a -50bp cut. However, the size of the rate reduction was mostly in line with market expectations.

Policymakers did not provide forward guidance and the post-meeting statement seemed hawkish. For example, policymakers – despite a split decision – unanimously judged “that the uncertain global scenario and the domestic scenario, marked by resilient economic activity and de-anchored expectations, require greater caution.” Also, the committee of policymakers also reinforced “with special emphasis that the extension and adequacy of future changes in the interest rate will be determined by the firm commitment of reaching the inflation target in the relevant horizon.”

Last week, the Bloomberg Global Aggregate Index (hedged to USD) returned 0.1% (-0.7% YTD), Bloomberg Global High Yield Index (hedged to USD) 0.2% (3.0% YTD) and Bloomberg Emerging Markets Hard Currency Aggregate Index 0.4% (1.0% YTD).

Over the week, the US 10-year Treasury yield decreased -1bp to 4.50% from 4.51% (up 62bp YTD) after dipping to a nearly one-month intraday low on Tuesday. The 2-year Treasury yield increased 5bp to 4.87% from 4.82% (up 62bp YTD).

Over the week, the 10-year German bund yield increased 3bp, ending the week at 2.52% from 2.49% (up 50bp YTD).

In the UK, the 10-year gilt yield declined -6bp, ending the week at 4.16% from 4.22% (up 64bp YTD).

New deals in the US investment-grade corporate market generally saw healthy levels of oversubscription despite the primary calendar having its second-busiest week of the year in terms of new issue volume, with the volume almost doubling weekly expectations. Sentiment appeared to improve in the high yield bond market as equities traded higher.

Yoram Lustig, CFA
Head of Multi Asset Solutions,

Michael Walsh, FIA, CFA
Solutions Strategist


Eva Wu,
Solutions Analyst


202405 - 3574415

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