Last week was another strong one for Japanese equities which continued to rally amid persistent weakness in the Yen and a highly supportive monetary policy backdrop. The +2.1% increase in the Nikkei 225 in local currency terms took the total advance for 2024 so far above +19.0%, an impressive outcome given the magnitude of gains already made last year. The rally has helped lift the Nikkei index above the 40,000 threshold for the first time in its history having returned to levels last seen in 1989 last month.
Moving to other markets, US equities also continued their own upwards march with the S&P 500 and NASDAQ rising by +1.0% and +1.7% respectively in US dollar terms. Lower treasury yields were also supportive with the 10-year bond trading 8 basis points (bps) lower at 4.19%. Gains were seen across the various underlying equity sectors although growth stocks ultimately led the advance once again.
In Europe, the MSCI Europe ex UK index increased by +0.5% with higher-than-expected inflation data keeping a lid on the size of the uptick. As for the UK, the FTSE 100 pulled back modestly with a -0.3% decline with the mid-cap centric FTSE 250 rising by +0.9%. Returning to Asia, the Shanghai Composite in China rose by +0.7% despite mixed economic data with hopes of further monetary support from Beijing underpinning the uptick.
Regarding commodities, oil prices ended the week in positive territory, Brent Crude rising by +2.2% to $84.19 a barrel. Focus remains firmly on the Middle East with investors also waiting to see whether OPEC will agree to maintain existing production cuts into the second quarter. Gold prices gained for a second straight week on hopes of slowing inflation in the US and what that could mean for Fed interest rates. The precious metal jumped by +2.0% to $2,074 an ounce with additional support coming from a modest pullback in the dollar.
Week Ahead
| Day | Country | Measure | Period | Forecast | Previous |
| Monday | Japan | Core CPI Inflation Tokyo Area YoY | February | 2.50% | 1.60% |
| Tuesday | China | Caixin Services PMI | February | - | 52.70 |
| Europe | Final Composite PMI | February | 48.90 | 48.90 | |
| UK | Final Composite PMI | February | 53.30 | 53.30 | |
| US | ISM Services PMI | February | 53.00 | 53.40 | |
| Wednesday | Europe | Retail Sales YoY | January | - | -0.80% |
| US | ADP National Employment Change | February | 150K | 107K | |
| Thursday | China | Exports YoY | February | 2.50% | 2.30% |
| China | Imports YoY | February | 2.00% | 0.20% | |
| Europe | European Central Bank Policy Meeting | March | - | - | |
| Friday | Europe | Revised GDP QoQ | Q4'23 | 0.00% | 0.00% |
| US | Average Earnings Change YoY | February | 4.40% | 4.50% | |
| US | Non-Farm Payrolls Change | February | 200K | 353K | |
| US | Unemployment Rate | February | 3.70% | 3.70% |
Source: Refinitiv Workspace, 04/03/24
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