Equity markets retreated again last week as concerns of a broader conflict between Iran and Israel, coupled with growing expectations of higher-for-longer interest rates in the US weighed on investor sentiment. US equities declined for a third consecutive week, the S&P 500 and NASDAQ falling by -3.1% and -5.5% respectively (in US dollars) with technology stocks which tend to trade on more expensive valuations, particularly weak. Treasury yields ground higher, the 10-year dated security seeing its yield rise by 10 basis points (bps) to 4.62%. Comments from Federal Reserve Bank of New York President John Williams who stated that there was no rush for the Fed to lower interest rates, provided support for yields.

Elsewhere, Japanese equities recorded a sharp retreat with the Nikkei 225 slumping by -6.2% in yen terms. It was the largest weekly decline for nearly two years with companies associated with the semiconductor value chain notably weak. In Europe, the MSCI Europe ex UK index declined by -1.0% (local currency) whilst the FTSE 100 shed -1.3%. Inflation data, which came in higher than expected alongside stronger wage growth numbers were both headwinds. One country to buck the negative trend was China where the Shanghai Composite rose by +1.5% thanks in part, to better than forecast economic growth data.

In commodity markets, oil prices experienced elevated volatility following Iran’s drone and missile attack on Israel, and the latter’s response. Brent Crude ended the week -4.7% lower at $87.30 a barrel having briefly jumped above $90.00 on Friday morning. Gold also edged lower despite briefly threatening to set yet another record high. The precious metal declined by -0.8% to $2,394 an ounce. Amongst the industrial metals, copper continued to gain momentum with last week’s Chinese GDP number helping to lift the metal by +5.0% to $9,797 a tonne.

Week Ahead

Source: Refinitiv Workspace, 22/04/24

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