Weekly Market Recap

The S&P Global UK Manufacturing PMI was revised down to 51.0 in March from the preliminary estimate of 51.4, below the 51.7 level in February. Manufacturing output decreased for the first time in six months; however, new orders and suppliers’ delivery times remained on an improving trend.

House price growth in the country showed signs of accelerating in March, according to the UK Nationwide House Price Index. The monthly index rose 2.2% YoY, up from 1.0% growth in February.

The annual rate of inflation in the eurozone rose to 2.5% in March, up from 1.9% the previous month. This was the highest rate since January 2025, driven by energy costs soaring by 4.9%. In contrast, inflation slowed in services, non-energy industrial goods, and food, alcohol, and tobacco.

A group of Germany's leading economic institutes, including the Ifo Institute, revised down its joint forecast for the country’s economic growth, citing the energy shock caused by the war in the Middle East. The 2026 forecast was lowered from 1.3% to 0.6%.

Manufacturing activity contracted in Spain in March, with the S&P Global Spain Manufacturing PMI falling to 48.7, well below market expectations of around 50.4 and down from 50.0 in February.

Manufacturing showed signs of improvement in Sweden in March, with the Swedbank Manufacturing PMI rising to 56.3, supported by higher employment and inventory purchases. This was the highest level since March 2022. Companies’ production plans for the next six months stayed high at 67.8, reflecting sustained optimism.

Retail sales in Switzerland rose by 0.9% in real terms in February compared with the same month last year, according to the country’s Federal Statistical Office. Within this, non-food sector sales rose by 2.8%, while retail sales of food, drinks, and tobacco fell by 1.1% year-on-year (YoY).

China’s March PMI data showed improvement across both official and private sector gauges. The official Manufacturing PMI rose to 50.4 in March, its fastest rate in a year, exceeding market expectations and following two months of contraction. The non-manufacturing PMI, which measures activity in the services sector, rose to 50.1 from 49.5 in February. Meanwhile, the RatingDog China General Manufacturing PMI, compiled by S&P Global, expanded for a fourth straight month to 50.8 in March. The breadth of the rebound suggests firmer momentum across both state-linked industrial firms and smaller, export-oriented private companies, supporting a near-term stabilisation narrative. However, both surveys pointed to rising input costs, indicating the recovery is uneven and increasingly cost-driven, with margin pressure emerging as a key risk.

China and Pakistan jointly proposed a five-point peace plan to de-escalate the Middle East conflict, calling for an immediate ceasefire, renewed negotiations, and the protection of critical shipping routes, especially the Strait of Hormuz. The initiative was announced after talks between Foreign Minister Wang Yi and Pakistan’s Ishaq Dar in Beijing. Both countries called for the protection of civilians and critical infrastructure, including energy facilities, power systems, desalination plants, and nuclear installations. They emphasised the importance of the United Nations and multilateral cooperation in advancing a lasting peace framework.

China began implementing the removal of the value-added tax export rebates on a wide range of products, including solar components, batteries, and industrial materials, effective 1 April. The move, announced in January this year, is aimed at addressing overcapacity and trade tensions, but it also implies higher export costs and margin pressure, which could accelerate consolidation in affected sectors.

After rallying on Wednesday on hopes of a de-escalation in geopolitical tensions, the stock markets fell sharply on Thursday when the US administration dashed hopes of a firm deadline for ending the war in Iran, with President Trump threatening to escalate attacks on the country over the next two to three weeks. Investors also received no reassurance about progress toward ensuring that shipping through the Strait of Hormuz would return to normal. The price of Brent crude jumped following Trump’s comments. With Japan’s economy highly vulnerable to oil price spikes, given its heavy reliance on oil from the Middle East, this weighed further on sentiment.

Amid the geopolitical and energy market turmoil, many investors converged around the view that the Bank of Japan (BoJ) could raise interest rates at its April meeting, in part due to growing concerns about rising inflation from higher oil prices. BoJ Governor Kazuo Ueda said that the central bank would closely watch moves in the yen as they affected the economy and prices. The yield on the 10-year Japanese government bond ended the week at 2.38, little changed from the end of the previous week.

The yen strengthened to JPY 159.7 against the US dollar, from 160.3 at the end of the prior week. The Japanese currency appreciated following comments by the country’s top currency diplomat, Atsushi Mimura, who asserted that it may be time to take decisive measures, given an increase in speculative moves in the currency market and the crude futures market. Markets have increasingly been positioning around a potential currency intervention by Japanese authorities to prop up the historically weak yen.

In the week’s economic data releases, the Tokyo-area core consumer price index, a leading indicator of nationwide trends, rose 1.7% YoY in March. Economists had expected the pace to hold at 1.8%. The cooling was partially due to continued slowing in gains in food costs. Separate February data showed that industrial production was in line while retail sales missed expectations. Industrial production fell 2.1% MoM, matching consensus forecasts, with autos, metal products, and electronic parts and devices the main drags. Retail sales fell 2.0% MoM, more than the 0.9% decrease anticipated by the consensus forecast and down from a 3.0% increase in January.

Total private-sector credit growth was 0.6% MoM in February, in line with market expectations. The YoY growth edged higher to 7.8%, its fastest pace of growth since late 2022. Australia's goods trade surplus widened by AUD 3.4 billion to AUD 5.7 billion in February, well above the consensus of over AUD 2.9 billion. The widening reflected a 4.9% MoM increase in export values, alongside a 3.2% MoM fall in import values. Australian job vacancies increased 2.7% quarter-on-quarter (QoQ) in the three months to February, driven by a 3.2% increase in private sector job vacancies.

Last week, Canada's financial markets were primarily impacted by two major developments: the Bank of Canada's cautious monetary policy stance amid geopolitical uncertainty and a significant widening of the trade deficit. On 1 April, the Bank of Canada published minutes indicating that policymakers face a dilemma in responding to war-fuelled energy price surges stemming from the Iran conflict, with officials agreeing to be patient as they decide how to support the sputtering economy while managing inflation risks. The following day, Statistics Canada reported that the country's trade deficit widened to CAD 5.7 billion in February—the largest shortfall since August—driven by record-high imports, particularly gold, even as exports rose 6.4%.

Last week, the MSCI All Country World Index (MSCI ACWI) rose 3.0% (-1.6% YTD).

The S&P 500 Index finished the volatile, holiday-shortened week higher by 3.4% (-3.5% YTD) amid tentative signs of a de-escalation of conflict in the Middle East (markets were closed on Friday in observance of the Good Friday holiday). Large-cap growth stocks outperformed their value counterparts, and small caps outpaced large caps. The Russell 1000 Growth Index returned 4.2% (-9.0% YTD), the Russell Value Index 2.6% (2.9% YTD) and the Russell 2000 Index 3.3% (2.3% YTD). The technology-heavy Nasdaq Composite rallied 4.5% (5.7% YTD), logging its best week since November.

After mostly declining on Monday, equities rallied sharply on Tuesday and Wednesday as US President Donald Trump suggested a growing willingness to wind down US military involvement in Iran. However, sentiment weakened again after a Wednesday night address from Trump that failed to provide a clear timeline for de-escalation, pushing oil prices higher and weighing on equities early Thursday, though indexes largely recovered by the end of the day, locking in positive returns for the week.

In Europe, the MSCI Europe ex-UK Index jumped 3.7% (-0.2% YTD). Sentiment across the region improved on hopes that the conflict in the Middle East may be shorter-lived than originally feared. Major stock indices advanced. Germany’s DAX Index surged 3.9% (-5.4% YTD), France’s CAC 40 Index climbed 3.5% (-2.2% YTD), and Italy’s FTSE MIB Index rallied 5.2% (1.9% YTD). Switzerland’s SMI put on 3.3% (-0.9% YTD). The euro was little changed against the US dollar, closing the week at USD 1.15 for EUR. The region’s stock markets were closed for Good Friday.

The FTSE 100 Index in the UK surged 4.7% (6.1% YTD), while the FTSE 250 Index was up 3.3% (-3.0% YTD). The British pound weakened against the US dollar, closing the week at USD 1.32 for GBP, down from 1.33.

Japan’s stock markets rose. The TOPIX Index added 0.8% (8.0% YTD), and the TOPIX Small Index gained 1.1% (9.3% YTD).

In Australia, the S&P/ASX 200 Index rose 0.8% (-0.1% YTD), driven by hopes of de-escalation following President Trump's comments. Australian government bond yields abated, and the Australian dollar strengthened against the US dollar by 0.3%.

In Canada, the S&P/TSX Composite increased by 3.7% (5.1% YTD).

The MSCI Emerging Markets Index gained 0.3% (3.0% YTD). The Brazilian market contributed positively, while those of China, India, Taiwan and South Korea contributed negatively.

Mainland Chinese stock markets retreated as markets balanced improving domestic activity signals against persistent external risks. The onshore CSI 300 Index, the main onshore benchmark, lost -1.4% (-3.9% YTD), while the Shanghai Composite Index declined by -0.9% (-2.1% YTD). Hong Kong's benchmark Hang Seng Index added 0.7% (-1.7% YTD). The MSCI China Index, which primarily comprises offshore-listed stocks, was little changed (-7.2% YTD). China’s mainland markets opened on Friday but were closed on Monday for the Qingming Festival, a traditional Chinese holiday when families honour their ancestors. Hong Kong markets were closed from Friday through Tuesday due to a combination of Easter and local public holidays.

In Colombia, markets were volatile over the week, driven by a sharp deterioration in relations between the government and the Banco de la República (BanRep). While the central bank delivered an interest rate hike as expected, the political fallout introduced a new layer of uncertainty that investors are now pricing in.

In a split decision, BanRep raised its policy rate by 100bps to 11.25% to bring inflation under control, with four members voting in favour of the 100bps increase, two voting for a 50bps reduction, and one voting for no change. However, the meeting took an unexpected turn when Finance Minister Germán Ávila Plaza abruptly left and later signalled a desire to distance himself from the board. He also called for a broader public debate on monetary policy. According to T. Rowe Price Sovereign Analyst Chris Mejia, while the minister cannot formally withdraw, his absence—or failure to appoint a delegate—could complicate future meetings and potentially block decision-making under existing rules.

Until now, markets had been focused primarily on inflation and the path of interest rates, with some expecting rates to rise toward ~13%. That focus is now shifting as investors grow increasingly concerned about institutional credibility—specifically, whether political pressure could interfere with central bank independence—sparking fears that upcoming rate decisions in April and June could be delayed or challenged in court, heightening the risk of policy paralysis.

In India, Indian sovereign yields climbed on the back of higher oil prices, while the central bank took a series of aggressive steps to stabilise the rupee after a period of sharp depreciation. The Reserve Bank of India (RBI) tightened rules on foreign exchange markets—most notably restricting banks’ ability to offer offshore derivatives such as non-deliverable forwards—in an effort to curb speculative pressure on the currency. These measures triggered sharp moves across markets: The rupee initially strengthened as banks rushed to unwind dollar positions, while equities—particularly banking stocks—came under pressure as investors priced in potential trading losses and tighter financial conditions.

At a high level, the RBI is trying to reduce “one-way bets” against the rupee. By limiting offshore trading activity and forcing adjustments in bank positioning, policymakers are shifting from traditional intervention (buying/selling dollars) toward directly influencing market behaviour. The impact has been visible in currency markets, where the rupee experienced volatile but ultimately firmer trading through the week, and in equities, where financial stocks declined amid concerns over earnings headwinds tied to foreign exchange exposures.

Last week, the Bloomberg Global Aggregate Index (hedged to USD) returned 0.7% (flat YTD), the Bloomberg Global High Yield Index (hedged to USD) 0.9% (-0.4% YTD), and the Bloomberg Emerging Markets Hard Currency Aggregate Index 0.7% (-1.2% YTD).

US Treasuries advanced as yields generally ended lower than the prior week. In addition to geopolitical headlines, comments from Federal Reserve Chair Jerome Powell that helped ease recent inflation concerns also appeared to support fixed-income markets. Over the week, the 10-year Treasury yield decreased by -8bps to 4.35% from 4.43% (up 18bps YTD). The 2-year Treasury yield declined by -5bp, ending the week at 3.84% from 3.91% (up 37bps YTD).

Over the week, the 10-year German Bund yield decreased by -10bps, ending at 2.99% from 3.09% (up 14bps YTD). The 10-year UK gilt yield declined by -14bps, ending the week at 4.83% from 4.97% (up 35bps YTD).