04th March 2024

Good Morning,

In the US, equities closed the week on a mostly positive note after favourable inflation updates. The Nasdaq joined the S&P 500 index in record territory for the first time in over two years. The release of the PCE price index on Thursday, considered the Fed’s preferred measure of inflation, showed a 2.8% increase for the 2 months ending in January, aligning with expectations. Despite core rises in the earlier CPI release surpassing expectations, the PCE report eased concerns which prompted a surge in stocks. The PCE data release also contributed to a dip on the 10-year treasury yield to its lowest level since the beginning of February. However, this encouraging inflation news had minimal impact on the Federal Reserve’s stance on potential rate cuts. Last week also witnessed a dip in the consumer confidence index, breaking a three-month streak of increases. The report highlighted enduring uncertainty regarding the US economy, with consumers primarily preoccupied by concerns about overall inflation.

Across Europe, the major stock indices experienced a mixed week. Germany’s DAX saw a 1.81% increase, contrasting with the FTSE 100’s 0.31% decline. Government bond yields in the Eurozone generally rose as sticky inflation data lead investors to reevaluate potential rate cut magnitudes and timing. Contrary to the US, preliminary Eurozone CPI estimates were issued, indicating that in February both core and headline inflation exhibited slower than expected deceleration. Annual headline inflation eased to 2.6%, while core inflation slowed to 3.1%, surpassing the anticipated 2.9%.

Asian markets ended the week in positive territory with Japan’s Nikkei index reaching above 40,000 for the first time, extending its streak of record highs. The benchmark index has surged by 19% so far this year, making it a top performer among major equity indexes globally. This surge is attributed to a combination of strong corporate earnings, a depreciating yen, and increased interest from foreign investors seeking alternatives to China’s markets.

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