Written by Nathan Sweeney – CleverMPS Portfolio Manager & Marlborough’s CIO – Multi Asset, the Market Review is packed with the most interesting and impactful events of the past week from the global financial markets.
Despite a light economic calendar, major benchmarks managed to post positive returns last week, buoyed by first-quarter earnings reports in the US. Microsoft, Apple, Amazon and Facebook parent Meta Platforms drove nearly half of the S&P 500’s gain, with Meta’s 14% share price rise due to a positive earnings beat. US stocks ended the week up close to 1%. The UK stock market closed down around 0.5%. Government bonds also performed well, boosted by weaker US growth.
The US government has approached JP Morgan, PNC and several other financial groups, along with some non-bank investment firms, to bid for all or part of First Republic, which has seen more than 97% of its value disappear this year. Both the government and First Republic have concluded that stabilising the bank will require the Federal Deposit Insurance Corporation to take it over.
In a phone call last Wednesday, Chinese leader Xi Jinping encouraged Ukrainian President Volodymyr Zelenskyy to negotiate with Moscow, marking the first conversation between the two leaders since the Russian invasion of Ukraine over a year ago.
US GDP growth rate in Q1 2023 increased by 1.1%, lower than the expected 2.0% and slower than the 2.6% observed in Q4 2022, indicating that inflation is likely to continue falling. A recent slowdown in business investment and the rising interest rates contributed to the reduced expansion.
The Bank of Japan kept its key short-term interest rate at -0.1% and maintained 10-year government bond yields at around 0% for April 2023, following a unanimous vote at new Governor Kazuo Ueda’s first policy meeting last Friday. However, the central bank revised its messaging around its policy rate and no longer cited the need to guard against risks from the COVID pandemic.
After a more than 5% drop the previous week, oil prices continued to fall, dipping below $77 on Friday, down from a peak of over $83 on April 12. Expectations of lower demand for oil arose due to weaker-than-expected economic growth.
Several EU member states have requested changes to the draft Nature Restoration Law, which requires EU governments to reverse environmental damage. The states want to ensure that the bill does not hinder renewable energy infrastructure or economic development. The law calls for countries to take “restoration measures” for marine habitats and “re-establish habitats” completely in other areas by 2050.
This week, investors will closely monitor the US labor report, monetary policy decisions by the Federal Reserve and European Central Bank, and earnings reports from Pfizer, AMD, Uber, Qualcomm, and Apple. Additionally, inflation rates will be released for the Euro area, and manufacturing PMIs are expected from China and India.
Sources: Nathan Sweeney – CleverMPS Portfolio Manager & Marlborough’s CIO – Multi Asset, Marlborough’s Multi-Asset Investment team, Financial Times, The Wall Street Journal, John Hancock, Morningstar, Trading Economics, ESGToday.
Risk Warning: These are Nathan’s views at the time of writing and should not be construed as investment advice. The opinions expressed are correct at time of writing and may be subject to change. Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.
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