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Global Markets Weekly Update

Our analysts recap activities across global markets in our weekly report.

Review the performance of global stock and bond markets over the past week, along with relevant insights from T. Rowe Price economists and investment professionals.


Nasdaq hits new records while Dow suffers worst week since early April

The major indexes recorded widely varying results over the week, with the Dow Jones Industrial Average recording its biggest weekly loss (-2.33%) since early April, while the technology-heavy Nasdaq Composite continued its recent march into record territory. The broad S&P 500 Index was roughly flat, while small-cap stocks lost ground. The disparate returns were also reflected in the substantial underperformance of an equal-weighted version of the S&P 500 Index, which trailed its more familiar, market-weighted counterpart by 127 basis points (1.27 percentage points). The market was scheduled to be closed the following Monday in observance of the Memorial Day holiday.

NVIDIA beats estimates

A primary factor driving the market’s divergence was the gain in shares of artificial intelligence chipmaker NVIDIA, now the third-largest company in the S&P 500 by market capitalization (trailing only Apple and Microsoft). The company reported its first-quarter earnings after the close of trading Wednesday, but T. Rowe Price traders noted that anticipation over the report seemed to play an important role in driving sentiment even earlier in the week. (As of Tuesday, Bank of America noted that NVIDIA had accounted for 37% of the S&P 500’s earnings-per-share gains over the previous 12 months, while Bloomberg reported that the stock had been responsible for 25% of the S&P’s 11.3% gain for the year-to-date period.) After beating consensus estimates, NVIDIA shares rose 9.3% on Thursday, adding roughly USD 220 billion to its market capitalization. 

The good news for NVIDIA did not translate into broader gains for the market. Nearly 90% of the stocks in the S&P 500 closed lower in the Thursday session, seemingly due to data suggesting a rebound in growth in May—leading, in turn, to speculation that the Federal Reserve would wait longer to cut interest rates. S&P Global reported that its composite index of business activity had jumped unexpectedly to 54.4 in May, its highest level in just over two years. (Readings above 50 indicate expansion.) While manufacturing activity picked up somewhat, the acceleration was particularly notable in the much larger services sector. 

Manufacturers see rising costs

Inflation data in the report appeared to especially concern investors. “Selling price inflation has meanwhile ticked higher and continues to signal modestly above-target inflation,” S&P Global’s chief economist noted. “What’s interesting is that the main inflationary impetus is now coming from manufacturing rather than services, meaning rates of inflation for costs and selling prices are now somewhat elevated…[suggesting] that the final mile down to the Fed’s 2% target still seems elusive.”

Friday brought further evidence that growth might be picking up in the second quarter. The Commerce Department reported that orders for durable goods excluding the volatile aircraft and defense orders—typically considered an indicator of business capital investment—rose a more-than-expected 0.3% in April, after remaining roughly flat over the first three months of the year. Conversely, sales of both existing and new homes, reported Wednesday and Thursday, respectively, were below expectations in April.

The S&P Global data appeared to drive a modest rise in longer-term bond yields, while futures markets began pricing in only a 39.9% chance of more than one Fed rate cut this year, down from 57.3% the week before, according to the CME FedWatch Tool. (Bond prices and yields move in opposite directions.) Tax-exempt municipal bond yields ended the week higher across the curve—with yields in the front and intermediate portions rising most prominently—amid heavy new issuance and cash outflows. Within the primary market, our traders observed healthy oversubscription among longer-maturity bonds, while demand was generally slower for bonds in the intermediate part of the curve. 

Conversely, issuance was in line with expectations in the investment-grade corporate bond market. Spreads hovered around either side of unchanged throughout the week, and issues were largely oversubscribed. Our traders reported that the softer macro backdrop, partly due to the prospect of near-term Fed rate cuts fading, led to some weakness among high yield bonds. Otherwise, investors seemed to continue focusing on the busy primary calendar. Our traders noted that new deal announcements and trade activity slowed ahead of the long weekend as the market worked through the outstanding transactions.


Index Friday's Close Week’s Change % Change YTD
DJIA 31,500.68 1611.90 -13.31%
S&P 500 3,911.74 236.90 -17.93%
Nasdaq Composite 11,607.62 809.27 -25.81%
S&P MidCap 400 2,334.40 113.96 -17.86%
Russell 2000 1,765.72 100.04 -21.36%

This chart is for illustrative purposes only and does not represent the performance of any specific security. Past performance cannot guarantee future results.

Source of data: Reuters, obtained through Yahoo! Finance and Bloomberg. Closing data as of 4 p.m. ET. The Dow Jones Industrial Average, the Standard & Poor’s 500 Stock Index of blue chip stocks, the Standard & Poor’s MidCap 400 Index, and the Russell 2000 Index are unmanaged indexes representing various segments of the U.S. equity markets by market capitalization. The Nasdaq Composite is an unmanaged index representing the companies traded on the Nasdaq stock exchange and the National Market System. Frank Russell Company (Russell) is the source and owner of the Russell index data contained or reflected in these materials and all trademarks and copyrights related thereto. Russell® is a registered trademark of Russell. Russell is not responsible for the formatting or configuration of these materials or for any inaccuracy in T. Rowe Price Associates’ presentation thereof.

In local currency terms, the pan-European STOXX Europe 600 Index ended 0.45% lower, as questions emerged about the pace of potential interest rate cuts this year. Major stock indexes were mixed. Italy’s FTSE MIB lost 2.57%, while France’s CAC 40 Index declined 0.89%. Germany’s DAX was little changed. The UK’s FTSE 100 Index slid 1.22%.

UK inflation slows less than expected; markets scale back rate cut bets

Annual growth in the UK consumer prices slowed less sharply than expected to 2.3% in April—the lowest level in almost three years—from 3.2% in March, dampening hopes that the Bank of England (BoE) would lower borrowing costs midyear. The consensus and BoE projection had pegged headline inflation at 2.1%. Core inflation, which excludes volatile energy and food prices, also surprised on the upside at 3.9%. T. Rowe Price traders said financial markets appeared to be pricing in only one quarter-point rate cut this year instead of two.

Eurozone PMI, negotiated wages stronger than expected

The first estimate of eurozone composite purchasing managers’ index (PMI) for May came in at a 12-month high of 52.3, up from 51.7 in April. (PMI readings greater than 50 indicate an increase in activity.) Services activity remained firmly in expansionary territory; manufacturing PMI improved but remained at contractionary levels for the 14th consecutive month. Input costs and output prices eased from April’s levels but remained above pre-pandemic averages.

The European Central Bank (ECB) said negotiated wages in the first quarter rose 4.7% year over year, partly due to one-off payments, up from 4.5% in the final three months of 2023. ECB economists said in a blog post that they expect negotiated wage growth to remain elevated in 2024, although they also believe wage pressures are set to decelerate.

ECB’s Lagarde: “Strong likelihood” of June rate cut

ECB President Christine Lagarde said in an interview with Irish television channel RTE that there was a “strong likelihood” that the central bank would reduce interest rates in June. Asked if people should expect a rate cut at the next ECB meeting, she replied: “No predicament, no prescription, no commitment, but it is a case that if the data that we receive reinforce the confidence level that we have—that we will deliver 2% inflation in the medium term, which is our objective, our mission, our duty—there is a strong likelihood.”


Japanese equities finished the week lower, with the Nikkei 225 Index falling 0.36% and the broader TOPIX Index experiencing a marginal decline. Equities were supported by upbeat economic data releases and a stellar earnings update from U.S. chip giant NVIDIA, which helped lift Japanese tech stocks. However, all gains were lost on Friday as Japanese indexes tracked Wall Street lower after U.S. data pushed the potential for a U.S. interest rate cut further out. It was a notable week for Japanese bond markets as 10-year government bond yields reached the 1.0% level for the first time in 11 years. 

Economic updates were few, but encouraging  

Flash economic data released during the week showed Japanese manufacturing activity recovered in May, expanding for the first time in more than a year. The manufacturing PMI climbed to 50.5 this month, up from 49.6 in April. In contrast, the services PMI eased a little in May, falling to 53.6 from 54.3 the prior month but remaining in healthy expansive territory. 

The “normalizing” of Japan’s bond market continues   

Japanese government bond yields continued their steady grind higher—a trend that has seen more than 25 basis points added to 10-year yields since the end of March, when the Bank of Japan (BoJ) lifted interest rates for the first time since 2007. Speculation about the timing of a next tightening move, as well as a possible reduction in the government’s bond purchase program, pushed benchmark yields to 1.0% on Wednesday.   

How to lift a yen-shaped anchor?

The BoJ has adopted a decidedly more hawkish tone in recent weeks, in part, to try and help jolt the Japanese currency from its protracted slump. With the yen currently trading around 24-year lows, fears are that this will undermine emerging Japanese inflation and, in turn, the prospect of any wage increases. However, robust data and hawkish minutes from the Federal Reserve's last policy meeting did not help matters, boosting the U.S. dollar and causing the yen to close the week softer in comparison, at around JPY 157 levels. 


Chinese stocks retreated as fears that rates would remain elevated in the U.S. offset optimism about Beijing’s latest measures to shore up the ailing property sector. The Shanghai Composite Index declined 2.07%, while the blue chip CSI 300 lost 2.08%. In Hong Kong, the benchmark Hang Seng Index fell 4.83%, according to FactSet. 

The People’s Bank of China (PBOC) announced a historic rescue package for the property sector in the prior week as data showed no sign of letup in China’s housing crisis. Measures included a re-lending program that would extend RMB 300 billion in low-cost funds to a select group of state-owned banks to lend to local state-owned entities for buying unsold homes, removing the nationwide floor level of mortgage rates, and lowering the minimum down payment ratio for home purchases. While most investors welcomed the plan, some remained skeptical on whether it will draw a line under the property slump, which remains a key drag on the world’s second-largest economy. 

On the monetary policy front, Chinese banks left their one- and five-year loan prime rates unchanged at 3.45% and 3.95%, respectively, as expected, after the PBOC kept its medium-term lending rate on hold. Some analysts anticipated that the central bank will continue to loosen policy this year and potentially reduce its reserve requirement ratio again, following a surprise cut in January, to spur demand.

Other Key Markets


Central bank cuts rates, predicts “pace of price increases will rise temporarily” in mid-2024

On Tuesday, the National Bank of Hungary (NBH) held its regularly scheduled meeting and reduced its main policy rate, the base rate, from 7.75% to 7.25%. The NBH also reduced the overnight collateralized lending rate—the upper limit of an interest rate “corridor” for the base rate—from 8.75% to 8.25%. In addition, the central bank lowered the overnight deposit rate, which is the lower limit of that corridor, from 6.75% to 6.25%. These 50-basis-point rate cuts were widely anticipated.

According to the central bank’s post-meeting statement, policymakers noted a pickup in economic growth in the first quarter, and they believe growth “is likely to accelerate further in the second half of the year.” They also anticipate that “the significant rise” in real wages since September 2023 will continue this year. 

As for inflation, central bank officials acknowledged that consumer prices increased 3.7% in annual terms in April—which is still within the bank’s “tolerance band”—and noted that annual core inflation “declined further by 0.3 percentage points” to 4.1%. They continue to expect that the “pace of price increases will rise temporarily in the middle of this year due to the backward-looking pricing of market services and base effects.” In addition, they predict that the “decline in core inflation…will stop in the second quarter” and that core inflation will stay in the 4.5% to 5.0% range for the remainder of the year.

While policymakers attributed the “improvement in the country’s risk perception” to factors such as “historically high foreign exchange reserves, a persistent improvement in the current account balance and a cautious approach to monetary policy,” they concluded that “the volatile financial market environment and the risks to the outlook for inflation continue to warrant a careful and patient approach” to monetary policy. As a result, they agreed to reduce rates by 50 basis points, matching the magnitude of their late-April rate cuts. They also emphasized that they are “constantly assessing incoming macroeconomic data” and will make future interest rate decisions “in a cautious and data-driven manner.”

Türkiye (Turkey)

Policymakers leave rates unchanged due to “lagged effects” of previous monetary tightening

On Thursday, Turkey’s central bank held its scheduled monetary policy meeting. As was widely anticipated, the central bank left its key interest rate, the one-week repo auction rate, at 50.0%. 

According to the post-meeting statement, policymakers noted a “limited decline” in the underlying trend of monthly inflation in April and confirmed that “services inflation, inflation expectations, geopolitical risks, and food prices” are sustaining broad inflationary pressures. However, as they did in their late-April policy meeting, central bank officials specified that the “lagged effects” of monetary policy tightening was the reason for keeping rates unchanged at this time, and they pledged that tight monetary conditions “will be maintained until a significant and sustained decline in the underlying trend of monthly inflation is observed, and inflation expectations converge to the projected forecast range.” They also reiterated their warning that future interest rate increases are possible “in case a significant and persistent deterioration in inflation is foreseen.” Nevertheless, they continue to expect disinflation to be established in the second half of 2024.


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